Service tax and vat on ready possession/rtm flats
jaguar.theimmortal
(Querist) 05 September 2016
This query is : Resolved
Can someone please help me to know if service tax and VAT is applicable if I buy a ready possession/RTM flat.
I want to know the rule as far as Maharashtra State is considered.
If your answer is yes then please can you please tell me the govt rule number or any Mumbai High Court Ruling under which I am not liable to pay the same.
As I have already bought a ready possession flat from the builder in 2012. Then I came to know from surrounding people in March 2015 that I should have not paid the same when I bought the flat.
Now for the refund of Service Tax and VAT I am fighting my own case in Consumer Court Forum. And for that they need the ruling evidence in order to go ahead.
Would be really thankful to you in providing either the court case number or govt's ruling number.
Ms.Usha Kapoor
(Expert) 06 September 2016
Dear Client,
Once you get the occupancy certificate from the builder you need not pay any Service Tax and VAT on constructed Property or Ready to move Flats property. ST and VAT are applicable to property under construction and not to constructed property.
Buying a Ready-to-move-in property
If you are buying a ready to occupy flat; in case the builder has developed the project to 100% & obtained the occupancy certificate for the same before selling it to you – it’s a product being sold. There is no service component involved in this and hence you don’t have to pay any service charges. And if it’s a product (and not a service) then should you be paying VAT (Value Added Tax) on it? Short answer is ‘NO’. VAT is not applicable for immovable goods. In summary, if you are buying a flat that is already developed by a builder, there is no Service Tax or VAT involved.
Update: Ancillary services provided by the builder, even if the property is ready to move in, will attract service tax – but only on the service charge, not on property value. Ex. service tax will be payable on property maintenance charges
Rajendra K Goyal
(Expert) 06 September 2016
Agree with the expert Ms.Usha Kapoor.
Raj Kumar Makkad
(Expert) 06 September 2016
In view of Notification 36/2010 dated 28-6-2010, all amounts received prior to 1-7-2010 are exempted from payment of service tax. It is therefore felt that the provisions will be effective from the notified date i.e. 1-7-2010
