Service tax and vat
Dinesh Kandpal
(Querist) 21 June 2016
This query is : Resolved
Dear Sir, I would like to know if service tax and VAT is applicable on flat purchase from builder. The agreement is done in April 2016 in Mumbai. The flat area is 642 sq. ft builtup. If applicable, what is the rate and on what value?
Recently Delhi High Court ruled that ST cannot be collected, and there is lot of confusion.
await reply.
Regards
Dinesh
R.K Nanda
(Expert) 22 June 2016
Contact tax lawyer
Rajendra K Goyal
(Expert) 22 June 2016
Discuss in detail with the local tax consultant.
T. Kalaiselvan, Advocate
(Expert) 25 June 2016
Service Tax under composition scheme is 3.09% of Total Contract Value for under construction flat. It basically means that service tax of 12.36% will be charged on 25% of total contract value, if the total contract value is less than 1 Cr or flats are below 2000 sq ft.
Dream of owning a house is still a dream for many and in order to bring affordability factor, most of the additional charges are not disclosed to the end user. One such monster is VAT (Value Added Tax) and Service Tax levied on the under construction flats.
As per ruling of Honorable Supreme Court of India, the sale of under construction flat / property is liable to pay VAT
However, VAT and Service Tax are not applicable for “Constructed Property”. It is only applicable for under construction flat. Secondly, VAT may vary from state to state as it is state subject but service tax is uniform across country i.e. 12.36% as it is fixed by Govt of India.
