Applicability of service tax
tapas biswas
(Querist) 21 February 2013
This query is : Resolved
Dear Sir,
I had booked one new flat on July 2009 for a total consideration Rs. 21 lacs including garage. Around Rs.16 lacs were paid by march 2010.
Now the developer is asking to pay service tax on the total amount of Rs. 21 lacs.
My question: 1. Is service tax applicable on the entire amount?
2. The date of applicability of service tax on purchase of new flat?
3. How can I ascertain that the said tax been deposited by the developer, what proof i can claim.
Rgds,
Tapas Biswas
Vineet
(Expert) 11 May 2013
Service tax is applicable only on payments made after 1st July 2010.
Service tax payment is liability of developer and not purchaser. For you only a receipt from developer would suffice.
R.V.RAO
(Expert) 21 February 2014
Following is an update on serv.tax matters
flats sold after obtaining completion certificate by the builder will not attract service tax.
the reason is there is only sale but no service .
sale attracts vat but not serv.tax.
if your builder has already obtained completion cert., and then after wards if sale deed is registered in your name by the builder, you need not pay serv.tax liability. it is a sale .vat applies. but not serv tax.
But,on the otherhand,after your flat registration is completed ,then if the builder obtains completion cert. you attract serv.tax liability.
however there is silver lining for you vide serv.tax notification no 26/12 wef 01/7/12,where by there is an abatement of 75% on value liable for serv tax.in other words,yo are liable to pay serv.tax @12.36% on 25% of value of your sale deed price of the property(flat).
further since builders take input tax credit for capital goods etc..,a further 5% abatement is possible if all the affected persons like you in your apartment complex can negotiate with builder.
an example is given below.
if the registered sale deed value of your flat is Rs.30 lakhs ,you are liable to pay serv.tax( @12.36% on Rs6 lakhs ie20%of Rs30 lakhs. )of Rs 74160/- only.
convince your builder for an abatement of 80% of sale value and pay serv.tax only on 20% sale value@12.36% including edu.cess of 3%
service tax abatement of 75%is provided by above serv.tax notification in respect of flats with carpet area of less than 2000 sq.ft and also of value of less than
Rs2 crores.
