Vat and service tax
Prabhash
(Querist) 27 April 2014
This query is : Resolved
Hello,
I purchased a flat in blr in year 2011(reg. dt Feb' 2102). Cost approx. 33L. In my sale deed or agreement, builder had not mentioned anything about VAT/service tax.
Now, I have 2 questions
[1] Can Builder/developet ask me now for VAT or service tax?
[2] It is whose liability to pay VAT and service tax to govt.? me or builder?
Thx In advance
Prabhash
R.V.RAO
(Expert) 28 April 2014
it depends on exact wordings in agreement for sale /sale deed. if it is written that buyer liable for taxes which are extra as applicable etc... then buyer liable to pay .legal position on vat and serv.tax in real estate industry is as follows.
as far as vat is concerned the supreme court in L&T vs.STATE OF KARNATAKA, held that vat is payable on under construction properties, which amounts to works contract.
as regards service tax,if builder has already obtained the occupancy cert./ noc for the apartments and then sold the flat to you ,no service tax attracted.otherwise you are liable to pay service tax @12.36% of 25% value of your flat(since there is an abatement on 75% value for serv.tax purpose , for res.complex where the flat area is less than 2000 sq.ft and the flat value is less than Rs one crore).
Prabhash
(Querist) 28 April 2014
Thx for your response. The builder has not mentioned any thing about vat and service tax in sale deed or sale agreement. All the pmt which is mentioned in pmt scheduled is already done.
am I still liable....
R.V.RAO
(Expert) 29 April 2014
THANKS.srigoyal ji.
R.V.RAO
(Expert) 29 April 2014
if the builder is silent in the sale deed or agreement of sale,you can also keep silence, provided, you/lawyer checked all documents for any wordings like any govt.levies payable by buyer etc...
Better get it carefully checked and rechecked by a property lawyer.
what is the stand taken by other flat owners regarding vat/serv.tax. what are they doing? how are their documents drafted?
if everything is in your favor,then no need to wake up sleeping dogs.
T. Kalaiselvan, Advocate
(Expert) 30 April 2014
Well advised by Mr. Rao on the subject,further it may be recalled that the VAT and Service tax can be levied for the building under construction and to be handed over subsequently, whether you purchased the flat after the builder obtained NOC and other formalities, clarify.
