Hi,
We are negotiating a property and have a clarification regarding the sales tax and VAT implications. During the property search, I visited several builders and all mentioned that in addition to the property cost, I need to pay registration charges + sales tax + VAT, so I was always under the impression that when we buy a property we need to pay the above taxes..
Now I chanced upon this builder "B" and we liked the deign of the house and the locality etc. His current venture he said would take a couple of years more to complete. Since we were looking for something to occupy sooner, he offered a completed, soon to be ready home in one of his recently completed ventures. This was in name of his relative Mr A. We saw the property liked and finalized it. During the negotiations, the builder said we need to draw the cheques towards the house in favour of Mr A. Sales tax and VAT cheques in favour of himself (the builder) and he would deposit to the concerned authorities.
Now the builder has been very supportive all along. The venture was approved by a couple of private banks. I said I wanted to go for a nationalized bank, without much fuss he provided all the link documents and other documents that the bank requested. Few modifications we asked he got them done. I talked to the actual owner of the property and they looked genuine too.
The Agreement we signed was a Triparty agreement - and the agreement mentioned that the builder was there on the agreement merely to avoid any disputes that might arise later on and that I would pay any tax etc applicable at the time of registration.
The immediate previous sale deed registers the land in favour of current owner Mr A. The builder then built the home for A, who then decided to sell it. The current sale deed mentions A to be owner of the land and the house on the land. So basically I am buying from A, all payments to A.
Now in this kind of transaction am I liable to pay Service Tax and VAT? The builder says only the land is registered, house has not been, so I need to pay the taxes, but I am not sure. Please advise.
