Vat & service tax
Ashish
(Querist) 25 February 2014
This query is : Resolved
Dear Sir,
I purchased my flat in year June 2011 and building was ready possession. I received my flat possession in the month of Nov 11 as it took time for loan approval.
The builder has not given the possession letter/NOC till now although we are staying in the flat. The builder has not received the OC/Completion Certificate. The builder has not even handed over the society to us.
Please let me know do we need to pay VAT and Service Tax.
With regards,
Ashish Tomar
Cell : 9850360308
Anirudh
(Expert) 25 February 2014
IF you had purchased the flat after receipt of Completion Certificate, it would mean you have purchased a ready built flat - which is an immovable property. Being an immovable property no VAT would apply, as VAT applies only to goods and immovable property is not a good.
Similarly, when you purchase a ready built building/flat (after receipt of completion certificate) there is no service involved. Therefore no Service Tax is payable.
However, if you have entered into an agreement to purchase a building/flat before completion certificate, it means that the building/flat is being constructed for you. It will attract both VAT (on the value of the material i.e. brick, steel, cement etc., used in the execution of the construction) and Service Tax on the value of the labour and services involved in construction.
Ashish
(Querist) 25 February 2014
Dear Anirudh,
As per your reply, I have entered into an agreement to purchase a building/flat before completion certificate is received to builder so I need to pay VAT and Service Tax. Thanks for the reply.
Please let me know as completion certicate is not received till now, and all flats are sold out in 3 years time gap (sold out started from year 2009 to year 2012) so all owners have to pay VAT and Service Tax or this will not be applicable to flat purchased before year 2011. Pls confirm whether rule will be applicable common to all owners or it will vary?
With regards,
Ashish Tomar
Vineet
(Expert) 03 March 2014
Mr Ashish, it is unfortunate that builder has not been able to obtain completion certificate and OC and handed over posession which itself is illegal. Please see whether architect of builder has given a completion certificate, to avoid service tax and VAT after that date.
Service tax is payable on 25% abated value with effect from 1-7-2010. So if somebody has already paid consideration prior to that date, he need not to pay any service tax. Only payments made after that date are liable to service tax.
Regarding VAT, in Maharashtra the 1% special scheme has started from 1-4-2010 (other experts please correct me). Before that the goods in transaction value have to be detrmined by builder which only be liable to VAT. But VAT is payable on complete transaction value.
