Vandana 01 December 2015

Registration of underconstruction flat

We brought a flat in hyderabad for 58 lacs. Builder gave us two agreement - Sales deed (on circle rate @30 Lacs) + construction agreement (28 Lacs). Builder initially claimed that while registering we will have to pay stamp duty (6%) and tax (ST@3.625% +VAT @1.25%) on sales deed value only. But now builder says we have to pay service tax (5.8%)and VAT (5%)on construction agreement as well. But nowhere in construction agreement they have mentioned about the tax to be paid. Construction agreement says that - "Second Party(us) intends to get his semi-finished Flat completed through the First Party(builder), requested the first Party to complete the Apartment by providing finishing and completion works and the First party agreed to do the finishing works to the semi-finished Flat ". Are we liable to pay tax on this agreement or is it the builders responsibility?

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Advocate Rohit (Advocate) 03 December 2015

Hello!

As far as Service Tax and VAT are concerned it is the builder who is bound to pay to the authorities. no where the act says the user have to pay. In case of simple purchase of land no Service Tax and VAT should be charged as it is a bare land and services or value is added in it. If you had paid service tax and vat for land agreement, then ask the builder to hand over the receipt of the same mentioing the builders Service Tax and VAT Registration Number upon it. Further, ask him to show the proof that he has paid the said amount to the Government.

Regards

Adv. Rohit Dalmia

9324538481

Mumbai