Related to service tax on flat
Pratit Agrawal
(Querist) 11 January 2014
This query is : Resolved
I booked my flat in march 2013 and I did registration in july 2013 with full finished, (On full amount)but my builder dont have completion certificate yet. and now he is asking me to pay service tax seperatly, it is shock for me. I did finished(on full value and not semi finished) registration.Builder's sales manager only asked me to do finished registration.
please advise what should i do now, along with me many more people are there in my boat.
I feel that, to get completion certificate only now builder is asking money from us.
Kindly help.
Thanks and regards,
Pratit
Anirudh
(Expert) 12 January 2014
Dear Mr. Pratit,
Ready built houses/flat being sale of immovable property does not attract service tax.
However, if any building/flat is to be constructed and given, and the builder / contractor gets money during the course of such construction from the buyer, he is considered to be rendering service of construction and as such liable to pay service tax. He is entitled to recover the said service tax from the service recipient (in this case the buyer of the flat under construction).
Whether a building/flat is a constructed flat (as it will not attract service tax) and under construction flat (as it will attract service tax) is sought to be determined by the grant of Completion certificate.
Therefore, if a building/flat is sold after receipt of completion certificate - no service tax.
If the completion certificate comes after the consideration for the building/flat is received by the builder/contractor, then service tax is payable.
Since in your case, the completion certificate had been received, after you made the payment, service tax is payable. PEOPLE IF THEY DO NOT WANT TO PAY SERVICE TAX HAVE TO FIRST INSIST WHETHER COMPLETION CERTIFICATE HAS BEEN OBTAINED OR NOT.
Please also remember, what you probably save in the amount of service tax payable in the case of building/flat under construction, you may end up paying higher consideration value in the case of constructed building/flat as in such cases the seller would be demanding more money for the property itself (though you will not be paying service tax).
Dr J C Vashista
(Expert) 12 January 2014
It is one of the hidden cost of flat, which generally builders donot mention/ quote at the time of booking but subsequently pass on tax liability to the purchaser/member.
R.K Nanda
(Expert) 12 January 2014
agree with experts.
Rajendra K Goyal
(Expert) 12 January 2014
Well advised by the experts, agree to it.
Rajendra K Goyal
(Expert) 12 January 2014
Also a repeated query:
http://www.lawyersclubindia.com/experts/Related-to-service-tax-on-flat--446856.asp#.UtKfrrSLq_I
Pratit Agrawal
(Querist) 12 January 2014
Dear All,
Thanks for your all guidance. But What should we do now? How we can come out of this ?
Thanks and Regards,
Pratit
Anirudh
(Expert) 13 January 2014
There is no question of coming out. You have to pay the service tax.
T. Kalaiselvan, Advocate
(Expert) 13 January 2014
The service tax is no doubt hidden cost, but you have no option than to pay in order to get the completion certificate.
R.V.RAO
(Expert) 03 February 2014
while service tax is payable by you AS ADVISED BY EXPERTS, I ADD THAT ,
only silver lining FOR YOU is THAT
(pl. understand carefully as you need to explain sometimes to un edu.builders ) since you have not yet paid serv.tax, if the builder agrees to receive from you service tax as per abatement of service tax rules in Notification No. 26/2012 dated 20.06.2012 made applicable wef 01/7/12.
Announced by govt.on buildings and res.flats ,if sale value is less than Rs 1 crore and area less than 2000 sq.ft.
remember 75% abatement is available .
means you need to pay serv.tax @12.36%(incl.edu.cess) on 25% of sales value OF FLAT.
then again ONE more advantage for you
is builders are now allowed (in the above said new notification and rules), cenvat credit on inputs and capital goods used and hence roughly 80% abatement can be claimed and 12.36% of serv.tax payable by you on 20% of sales value of flat as shown in your sale deed.
eg:if the regd.sale deed value of your flat is say Rs30 lakhs . only 20% attracts serv.tax with abatement and actual serv tax payable by you is @12.36% of Rs6 lacs ie Rs74160/. BEST OF LUCK
