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SANJAY JOIL (LAW STUDENT)     14 March 2010


Hi Seniors !  this is my first post.  I have booked a flat on DECEMBER 9,2009.  Whether I will have to pay service tax @  10%  .i.e   (3.399%  in fact)   as per  Budget/Finance Act 2010, if I registered the same  in the month of April,2010.  Will this new provision will come into force with retrospective effect ?  Please guide.


 11 Replies

Vineet (Director)     17 March 2010

The provision is under proposal stage and will be applicable from a future date to be notified. As far as flats registered prior to new amendemets being effective, we have to wait for clarification in this regard. There is unconfirmed news that all bookings prior to new provisions may be exempted but one has to wait till it comes out in black and white.
1 Like

ramaraju ramaiah (Tax Consultants Advocates)     18 March 2010

in my openion it is applicable to prospective from the date of publication in gazet it is not applicable

to restrospective effect to all the under construction flats

1 Like

Gundlapallis (Advocate)     20 March 2010

Registration date is applicable for payment of service tax - though you booked the flat in the previous year the registration is done in the current year for which the budget is applicable.  But however, as Mr. Vineet's opinion the proposal is still under consideration and further exemption of prior bookings might go in your favour. 

1 Like

Raj (Lead)     11 August 2010

Hi everybody,

Is there any update on this tread? I have similar case as Sanjay, I booked the house in Nov-2009 but have not registered till date, now my builder is asking to pay 2.5 of the flat value.


siva kumar (Manager )     18 August 2010

Dear Sir

Bombay High Court stays collection of Service Tax levied on buildings under construction


The Bombay High Court has granted an interim stay on collection of Service Tax levied on buildings under construction, following a writ petition filed by the Maharashtra Chamber of Housing Industry (MCHI). Mr Sunil Mantri, President, MCHI, said the chamber had urged the High Court to restrain the respondents (Union Government and others) from taking steps against the members of the Chamber in respect of transactions for construction, development, and sale of immovable property under the various provisions of the Finance Act, 1994 and a new entry as amended by the Finance Act of 2010 in any manner, besides challenging the constitutional validity of the amendment.

This is an interim order and the hearing has been posted to August 3, 2010.

The text of the decision is reproduced below:


Writ Petition No. 1456 OF 2010




V C Daga And S J Kathawalla JJ.,

Dated: July 23, 2010

Appellant rep by: Mr.Rafique Dada, Senior Advocate i/b. Parimal Shroff & Co

Respondent rep by: Mr.R.V.Desai, Senior Advocate with Mr.R.B.Pardeshi

Service Tax – Construction Service – Constitutional Validity of Finance Act 2010 Amendment challenged – No coercive steps till next hearing: Notice issued to Attorney General of India




Perused petition.
2. Arguable questions are raised in the petition with regard to the constitutional validity of Section 65(30a) read with Section 65(105)(zzp) and Section 65(105)(zzzh) read with Section 66 of the Finance Act,1994, as amended by the Finance Act, 2010 which needs consideration.
3. Rule.
4. Since the constitutional validity of the aforesaid provisions has been challenged, issue notice to the Attorney General of India along with respondent Nos.2 & 3, returnable on 3rd August,2010. In the meantime, until next date of hearing , no coercive steps shall be taken against the petitioners for the recovery of service tax in relation to the provisions in question, but it is clarified that assessments may proceed in accordance with law.
5. Mr.R.V. Desai, Learned Senior Counsel waives service on behalf of respondent Nos.4 to 6.
5. To be heard along with Writ Petition (L) No.1476 of 2010. Stand over to 3rd August, 2010.


1 Like

shanmuga sundaram (Senior Consultant)     20 August 2010

1. What is the applicable Service tax (per union budget 2010-11) for buying an appartment (flats) ? There seems to be lot of discussion around this subject. So far no firm answer to this question.

2. Suppose, If the service taxes are applicable for a purchase of an appartment , then what percentage of tax is levied ? Is it 10% of the 33% of the total cost of the flat?

3. As per the recent budget, from which month this Service tax comes into effect ? Is it effective from the time of booking (i.e. the date when the agreement is executed between the buyer and the promoter) or is it effective from the date of sale deed execution ?

Please clarify.


Shanmuga Padmanathan

Nilufer Daruwalla (Executive Assistant to General Manager)     24 August 2010


I have bought a 1 BHK flat under construction in Royal Palms in Goregaon East. The registration of the agreement was done in Feb 2010 and I will get the possession in Feb 2011.

I am making slab wise payment to them. Now, the builder says that from July 2010 onwards, whatever slab wise payment I make, I have to pay 2.57% on each slab.

Please advice if I should pay these amount or no?

PARAMESWARAN.P.A (officer)     25 November 2010

The Central Board of Excise and Customs, has clarified that "Generally, the initial agreement between the promoters / builders / developers and the ultimate owner is in the nature of ‘agreement to sell’. Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter / builder / developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of ‘residential complex’. However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax.

Based on the facts and circumstances of each case and based on the above clarification, the applicability of service tax on each individual case can be decided.



PARAMESWARAN.P.A (officer)     25 November 2010

The above clarification is useful with reference to applicability of service tax on the sale of Residential Apartments / Houses for the period prior to 1/07/2010.


Gorimaa..B (Law Student)     10 October 2011

Flat buyers can exempt from service tax?plz ans

shankar (self)     22 November 2011

Dear Respected Sir,

Can you please help me in providing your valuable inputs.

This is regarding the extra charges being imposed by the builder
during registration.
I have purchased a FLAT in Jan 2010 with Possesion Date of Dec 2010.

My agreement says only to pay 49,11,500/ + (Flat Charges + Maintenance Charges) and 2,00,000/-( Registration+Stamp Duty+Legal Charges) . NowI am asking for registration of the flat and the builder is asking to pay extra Govt. Levies@ 6.5% of 49,11,500 (i.e 3,19,248/-) which is not a part of my agreement. Also he is charging me the late payment charges of 2,06,628/- which is because disbursement got delayed from BANK. The builder did not send any demand letter to the bank to disburse the amount and there was no progress in the construction.The disbursement was on date basis and not on SLAB completion. The builder planned the dates in agreement in such a way that he knew the Bank processing would delay in disbursing the payment and he is now charging me...Till date he didnt turned up saying i need to do the late payment charges but now he is asking me....

My Agreement was done - Jan, 2010
Actual Flat Possession Date was - Dec,2010 (Still Not Given)
Current Situation - Not yet giving Possession Date and demanding more money

Answer my questions inline to my commments please...

Please let me know

1. What are 6.5% charges? Builder says the 6.5% charges are Govt Levis
2. As my Agreement was done  in Jan, 2010 but still am i liable to Pay the VAT and Service Tax?
if so what should be the break up?


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