Service tax and vat on undersconstruction flat
Nishith Thyvalappil
(Querist) 09 October 2011
This query is : Resolved
Dear Sir,
I have booked a Flat in Kochi,Kerala in Aug 2007 and 90% of the amount is paid by October 2009. The appartment is almost ready for occupation and the builder has sent a final bill asking for Service Tax+VAT+Labour Welfare fund which in total is 9.12% of the agreement value. I understood all the payments made before 1st August 2010 is exepmted from Service Tax , does this mean that I need not pay service tax ?
Is there VAT on construction of Flats ? if yes how much is it ?
Thanks in advance
B.Chakrapani Warrier
(Expert) 10 October 2011
KVAT depends on the terms of the contract entered into between you and the builder. If in the said contract, the builder is constructing the flat in the capacity of a 'contractor' ,definitely, works contract tax under KVAT attracts to the builder meaning thereby he will levy the said tax upon you which is again subject to the terms of the said contract. The rate of tax is 12.5% of the contract value subject to certain deductions. However,the builder has a choice to opt for 'compounding' and if so opted, the rate of tax is 3.03 % on the contract value.
R.RAJENDRAN
(Expert) 10 October 2011
Construction of Residential Complex has been liable to tax since 16/06/2005,under section 65(30a) of Service Tax. From, 24/02/2009, the rate applicable is 10.3%
There is vat liability, as the goods involved in the works contract of construction of flat would be liable for vat at the rate as prescribed under the local State Act.
Nishith Thyvalappil
(Querist) 10 October 2011
Thank you very much sir,
Sir about service Tax, understood that all payments made before 1st August 2010 is exempted from Service tax, is it true ?
The builder have been collecting service tax from me from Aug 2007 till Oct 2009.
Thanking you once again
Vineet
(Expert) 15 October 2011
Service tax is payable @10.3% on 25% of outstanding balance payable after 1st July 2010.
So effectively, in your case service tax is payable @2.575% on sums paid after 1st July 2010.
