Service tax rate.
amit
(Querist) 27 January 2015
This query is : Resolved
I have booked a flat of 550 Sq. ft. in Kolkata in 2014.
How much service tax I've to pay . Let me know the value in percentage on the actual valuation of that flat . Also inform me how & within what time period I've to pay that service tax.
Dr J C Vashista
(Expert) 28 January 2015
Is "service tax" applicable for booking a flat in west Bengal or any other state in India?
Rajendra K Goyal
(Expert) 28 January 2015
Service tax is applicable on under-construction flats. There is sale of goods elements, in addition to service, the tax is applicable on 25 per cent of the gross consideration. While service tax is charged at 12.36 per cent, in case of under construction flats, the effective rate works out to 3.09 per cent of the value of property. This is because service tax is not applicable on the entire purchase price.
T. Kalaiselvan, Advocate
(Expert) 29 January 2015
A recent judgement by Guwahati High court excerpts are given below for your information:
“Flat Purchase Agreement” not subject to service tax: HC
GAUHATI. Giving a breather to Real Estate Developers on whose neck the sword of service tax demands on agreement for sale of flats was hanging consequent to Advance Ruling in case of Hare Krishna Developers AIT-2008-127-AAR; Gauhati High Court vide a recent ruling AIT-2008-213–HC has ruled that “flat purchase agreement” is not subject to service tax. Any advance, made by a prospective buyer, or deposit received by the petitioner-company, is against consideration of sale of the flat/building to such prospective buyer and not for the purpose of obtaining “service” from the petitioner-company.
The High Court ruled as under:
The circular, dated August 1, 2006 is binding on the department and this circular makes it more than abundantly clear that when a builder, promoter or developer undertakes construction activity for its own self, then, in such cases, in the absence of relationship of “service provider” and “service recipient”, the question of providing “taxable service” to any person by any other person does not arise at all. In the present case too, the materials placed by the writ petitioners clearly show that the construction activities, which the petitioners have been undertaking, are in respect of the petitioners' own work and it is only the completed construction work, which is sold by the petitioner-company to the buyers, who may have made agreements for sale before the construction had actually started or during the progress of the construction activity or at the end or completion of the construction activity. Any advance, made by a prospective buyer, or deposit received by the petitioner-company, is against consideration of sale of the flat/building to such prospective buyer and not for the purpose of obtaining “service” from the petitioner-company.
