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VIJAY K. TEOTIA (ADVOCATE)     05 March 2017

Service tax by builder

The builder is charging service tax along with cost of flat. Is it permissible to charge service tax by the builder from prospective buyers? Can buyer demand refund of service tax already paid to builder in previous payments? Or if service tax is not refunded by the builder can a buyer take exemption or benefit under Income tax act?


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 5 Replies

Ms.Usha Kapoor (CEO)     06 March 2017

In case of under construction flats you'll have to pay Swervice  Tax. Once construction of Flats is completed and gives his OC fo ryou to occupy th e flat he has no legal righ tto demand service tax.So don't pay  any service tax to him if  he  i smaking illegla demands for construction completed flats.If by making PAYMENT OFSERVICE TAX TO THE BUILDER FOR CONSTRUCTED FLAT-YOU CAN CLAIM DEDUCTION UNDER INCOME TAX ACT 1961.

Sushanta Kumar Mishra (Salaried employee)     09 March 2017

I have booked a under conswtruction flat with super built up Area less than 2000 sq. ft. and the cost is less than 1 crore. The builder is charging 4.5% service tax in the instalments. Now it may pleasae be clarified whether the service tax applicable should be 3.75% or 4.5%. The builder is giving the reference of a Govt notification dated 01-03-2016, which is attached herewith.


Attached File : 330787 20170309172138 1031366124 service tax notification.pdf downloaded: 42 times

Ms.Usha Kapoor (CEO)     10 March 2017

15% of 25 of total; Purchase priice of flat.. 3.75% Service Tax you'll have to pay  for carpet area less than 2000 Sq.Feet and cost less than 1 crore.

This has been applicable from 1st July 2016.

Sushanta Kumar Mishra (Salaried employee)     10 March 2017

Madam, can you give the notification Number, so that I can take up the matter with my builder?

Ms.Usha Kapoor (CEO)     12 March 2017

aCCORDING TO THE FOLLOWING INFORMATION SERVICE TAX FO RUNDER CONSTRUCTION READENTIQOL PRO-ERTIES WITH CARPET AREA LESS THAN 2000 sQ.fEET AND CXOST LESS THan Rs.1 crore is 3.09% For commercial property  it is  3.7%.Please see below

Separately, with respect to residential properties, please note that with effect from May 9, 2013, the applicable service tax on under-construction residential properties, having carpet area of less than 2,000 square feet and the consideration charged by the builder for the same is less than R1 crore, continues to remain 3.09%.


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