Service tax on under construction of flat
chintan
(Querist) 24 March 2014
This query is : Resolved
I have purchased one under construction flat in 2010 and same was registered on 30-jun-2010 ..According to me service tax is implemented for sale of flat from 01-jul-2010 so can you advice in my case weather service tax will be applicable or no as agreement was registered one day prior of date mentioned for service tax.. however builder is demanding service tax on instalments that I have paid to him post 01-Jul-13 stating which I have denied stating sale of flat is already done before date prescribed .. am I liable for that as law doesn't say if payments are made post o1-Jul-10 I have to pay Service tax.. if I am not liable can you please help me with section and details of act as I have to produce this in court of law in two days
R.V.RAO
(Expert) 24 March 2014
flats sold by a builder, after obtaining completion certificate will not attract service tax.
the reason is there is only sale of a completed flat but no service .
sale attracts vat but not serv.tax.
in case your builder has not yet obtained completion cert. but sold the flat to you(under construction) ,then you are liable for serv.tax @12.36% of 25%of flat sale value (as per your regd.sale deed),payable by you at the time of registration of under construction flat.
AS SAID above, vide serv.tax notification no 26/12 wef 01/7/12, there is an abatement of 75% on value liable for serv tax.in other words,THat is why ,you are liable to pay serv.tax @12.36% , only on 25% of value of your sale deed price of the property(flat), as said above.
further pl. note builders take cenvat credit on input serv.
So,depending on your negotiating skills,a further 5% abatement is possible if you/ all the affected persons like you in your apartment complex can negotiate with builder, for addl. abatement of another 5%.
so you get 80%abatement and serv.tax payable on 20% of value of your flat(as per regd.deed value).
an example is given below.
if the registered sale deed value of your flat is Rs.30 lakhs ,you are liable to pay serv.tax( @12.36% on Rs6 lakhs ie20%of Rs30 lakhs. )of Rs 74160/- only.
i presumed you will convince your builder for an abatement of 80% of sale value and pay serv.tax only on 20% sale value@12.36% including edu.cess of 3%
service tax abatement of 75%is provided by above serv.tax notification in respect of flats with carpet area of less than 2000 sq.ft and also of value of less than
Rs one crore.
Dr J C Vashista
(Expert) 24 March 2014
Very well advised by Mr. R V Rao, I agree and appreciate
ajay sethi
(Expert) 24 March 2014
agree with Mr Rao
Rajendra K Goyal
(Expert) 24 March 2014
Well advised by the expert, agree to it.
R.V.RAO
(Expert) 24 March 2014
Thanks. sri. Dr.j.c.vashista ji,sri jaggarao garu,sri ajay sethi ji and sri r.k.goyal ji.
R.V.RAO
(Expert) 25 March 2014
Thanks. sri kalaiselvan ji.
krishna mohan
(Expert) 26 March 2014
Very nicely clarified by Mr.Rao on law position of liability of Service Tax payable.
T. Kalaiselvan, Advocate
(Expert) 25 March 2014
