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Ramesh (Manager)     05 January 2014

Service tax on other charges in an under construction flat..

Dear Members,

I have booked a flat in Mumbai in the month of September 2014. It is an under construction property where the builder/developer has promised possession by Dec 2014.

I have paid my earnest monies while the rest is paid by bank loan.

The builder at the time of booking the flat mentioned in his list of payments:

1. Consideration Value of flat including one covered parking Rs.2,78,02,500/-

2. Service Tax of 3.708% on the consideration value Rs.10,30,917/-

3. Registration & Stamp Duty:

i. Stamp Duty - Rs.13,90,125/-

ii. Registration - Rs.30,000/-

iii. VAT @ 1% - Rs.2,78,025/-

Total (3 i to iii) = Rs.16,98,150

4. Society Charges & Other Charges including -

i. Share Money - Rs.350/-

ii. Adhoc Maintenance for 2 Years - Rs.2,84,840/-

iii. Corpus Fund - Rs.35,100/-

iv. Society Formation - Rs.20,000/-

v. Club Membership - Rs.50,000/-

vi. Legal, Electric & Water Connection - Rs.52,650/-

vii. Development Charges - Rs.87,750/-

Total (i to vii) = Rs.5,40,690/-

viii. Service Tax on Other Charges = Rs.7,802/-

Now the builder is demanding Rs.26,005/- as Service Tax on Other Charges with the explanation that the Service Tax was earlier calculated on 3.09% and now it has been increased to 12.36% hence the increase from Rs.7,802/- to Rs.26,005/-

I would appreciate if members help me with the following:

1. What components constitute Other Charges from the above mentioned list?

2. Which of the above listed components would attract Service Tax?

3. What would be the percentage at which the Service Tax should be calculated on the components attracting Service Tax?

Thanx in advance for your help and support.

Ramesh



Learning

 4 Replies

T. Kalaiselvan, Advocate (Advocate)     05 January 2014

Please contact a legal consultant in the local with all papers and get his opinion, because the builder may or may not be correct while charging such charges.

Advocate Ravinder (Advocate/Attorney)     08 January 2014

Out of the above, some charges are optional and some of them are not payable. There is some fishy. Contact a good lawyer who is specialized in Buildings and apartments.

Rajesh Thakker (Advocate)     10 January 2014

Dear Ramesh,

Your builder is absolutely wrong for asking service tax @ 12.36%. Your builder has accepted composition scheme as you had mentioned in condition that the service tax @ 3.09%. Your builder get abatement @ 75% of the total value of the flat. He is paying service tax on 25% of flat value. It means flat value is Rs. 100, then less 75 and tax on balance Rs. 25*12.36=3.09. The demand of your builder is wrong.

Sriram (engg)     27 October 2014

I want to know the Service tax a charges for a villa which is under construction  around 2200sqf and cost of villa is : 1,62,00,000 (land and construction cost).

The builder is asking to pay 4.944%  and he is saying the service tax got revised.

 

Appreciate your help in this regard Sir..


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