Bishan (farmer) 25 December 2014

Service tax under construction property

I have purchased flat in Mira Road, Maharashtra and got it registered with Department of Registration & Stamps, Government of Maharashtra in June 2012 (19/06/2012) which is still under construction. Developer demanded S.T and VAT as so far I have not paid any amount.

As per the GOI Notification, Service Tax under Construction Property is applicable w.e.f. 01/07/2012.

I have made major payment prior to 01/07/2012 and some payment yet to be made.

Pl advice me:

1.whether payments made prior to effective date of notification i.e. 01/07/2012, am I liable to S.T. and Vat or not.

2. whether as buyer I have to pay the entire S.T. and Vat consideration only after the building completion certificate had been obtained by the builder.

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2 Replies

T. Kalaiselvan, Advocate (Advocate) 27 December 2014

You are liable to pay the applicable ST and VAT along with the consideration amount.

Arvind Pal (service) 04 January 2015

Service tax is leviable on residential construction. Central Board of Excise & Customs have clarified that the service tax on the amount received after 1.7.2010 will be leviable. In your case since you have booked a flat in July, 2012, you will be liable to payment of service tax. However, it is to be noted that the rate of service tax will be chargeable on 25% of the total amount of cost of flat if the cost of land is included in the cost of project. Certain builders also avail WCS method of payment of service tax and under this service they have to pay 4.12% service tax till 31.3.2012 and thereafter 4.94%.