When to pay s.tax and vat for underconstruction property


 

Hello, my name is Rishabh and I have booked a property in Pune. It is an Under Construction Property with possession date confirmed as Dec, 2013. Right now, the construction has just started and plinth work is going on. The builder is asking for payment of Service Tax and VAT at the time of agreement which I will be doing this month. 

My question is when builder has to pay the VAT or Service Tax to the government? Is it after the construction is finished or its applicable on per booking basis. Also, should I ask for a government receipt over the actual payment of Service Tax and VAT.

I am confused about paying him now as nothing is ready in the building as of now.

Thanks in advance..

 
Reply   
 
practicing advocate

No VAT and service tax for such transactions
 
Reply   
 



So, it will be payable after the possession?

 
Reply   
 

service tax is payable by builder on collection / advances received from customers .  & VAT is payable at the time of registry of the said property.

 
Reply   
 

You have not defined the property of construction very clearly.  If it is individual building, there is no serive tax.  If it is a flat more than 16 houses then service tax is applicable.  you clearly indicate the type of construction so that we can clarify clearly.

 
Reply   
 

It is a multistorey apartment building with 32 flats in each building.

Is it OK to pay him beforehand all the Service Tax?

Otherwise when it should be paid. The builder has to pay for each advance transaction or he has to pay it one time for the complete cycle?

I am taking a loan on the property with 80% value being taken from Bank.

 
Reply   
 

Service Tax is mandatory.  Service Tax is to be paid on advance / bill / payment received whichever is earlier.  whenever you make part payment, they have to pay service tax for the payments received by the builder.  VAT is to be paid on completion of the building and not in between or against advance.  it is based on the completion and rasing the bill on you.  hope i have clarified your querry.

 
Reply   
 

Please can you tell me percentage of service tax and Vat.

Is service tax is diffrent for assessment year 2010-11 and 2011-12.

Please tell me percentage, thanks in advance.

 
Reply   
 
Chartered Accountant

In the maharastra the VAT is payable on all the aggrement registed after 1.4.2010 @ 1% whereas Service Tax is payable on all the property including residential property registered after 1.7.2010 @ 2.57% of the registered value.

As far as time of payment is  concerned it is to be paid by the builder once the sale is complete and the completion certificatge is issued by the authority however builders collect it at the time of registration of agreement. This provides them additional funds to use till the property is complete.

The levy of VAT was challanged in the Honbl high court and HC has given verdict in favour of Govt.

In my view VAT should not be levied on the residential properties since this does not come within the defiinition of Goods as defined unde sale of goods act.

 
Reply   
 

Hello,

I am Gokul Ganjare  and I have booked a property in Pune in 31st Oct 2009 and done aggriment on 01st.Jan.2010 . It is an Under Construction Property with possession date confirmed as March, 2013. Right now,85 % work is over. The builder is asking for payment of Service Tax and VAT

I am confused about paying so i have pay or not Applicable for me because as following

In the maharastra the VAT is payable on all the aggrement registed after 1.4.2010 @ 1% whereas Service Tax is payable on all the property including residential property registered after 1.7.2010 @ 2.57% of the registered value.

I have done aggriment on 01st.Jan.2010  before 01.04.2010

Please sugget me and how much Services Tax and Vat I have Pay.

 

Thanks

Gokul

 
Reply   
 

LEAVE A REPLY


    

Your are not logged in . Please login to post replies

Click here to Login / Register  



 

Search Forum:








×

  LAWyersclubindia Menu