Vat & service tax on purchase of flat

1.    I am Planning to Purchase a flat in Bangalore, Karnataka from a reputed builder. The flat is, though ready for possession, the NOC from competent authority is expected by Dec 2013. Since there are only few flats left, the builderhas given me very little time and encouraging me to come to agreement by depositing 3 lakhs by last week of October and assured me that additional 90 days will be given to me to pay the rest of the amount.

2.   The builder in his price list added VAT @ 10.15% and 4.944% as service tax ( total cost of these two added coming upto 9.26 lakhs) on the construction charges. I read in one of the post that, if the completion report is available, the buyer is not supposed to pay service tax and the builder cannot pass on the VAT to the buyers. I kindly request you to advice me :-

       (a)     Do I have to pay VAT & Service tax?

       (b)     If yes, the percentage of VAT & service tax mentioned above is correct?

       (c)     Can ask for the receipt/challan from the builder, just to ensure that my hard earned money is remitted to the govt.

Thanking you


If you are buying the flat after completion of construction then there is no liability of VAT on you but if you buy the flat before completion of the flat i.e. in installments then there is liability of VAT on you.


I booked a under construction flat in 2008 in a big residential complex in Thane, Maharashtra and got possession in 2010 after about 2 years. Now the builder is charging VAT @ 3% of agreement value from some residents and @ 4% of agreement value from other residents. Moreover it is not known at what rate he is paying  the VAT amount to the Government.

Q1. Is the act of builder charging varying rate of VAT from residents legal?

Q2. How to find out whether the builder is remitting the entire VAT amount collected from the residents to Government.?

Q3. Is it possible to get the  information through RTI


Prabir Sengupta

Thane 400601




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