Tuesday, July 3, 2012

SERVICE TAX REDUCED ON CONSTRUCTION (FLATS) SERVICES WEF 01.07.2012


on Tuesday, July 3, 2012

Few days Back we have received a Comment from a reader that he has Booked a Flat and his builder is asking him to pay Installment in advance to save service tax as it is going to be increased from 01.07.2012" But the Fact is totally on reverse side. The fact is that service tax effective amount payable by developer  is reduced and this benefit must be passed on to the buyer by reducing the rates of the Buildings etc.

Hold on ....I know that every body is anxious to know the detail and Notification number by which this reduction in effective rate has been done.Details is given below.

Service tax on activity of developers of selling the building or part of the building to be constructed on advance payment (usually construction linked payments) was made subject to service tax under the category of “Commercial or Industrial Construction Services” and “Complex Construction Services” w. e. f. 01.07.2010.

Now, w. e. f. 01.07.2012, in negative list regime, activity undertaken by developers have been included as declared service in clause (b) of section 66E of Finance Act, 1994.

Relevant abatement scheme as given in Sr. 12 of table given in Notification No. 26/2012 dated 20.06.2012 is as under:


Sl. No.
Description of taxable
service
Percentage of Taxable portion
Conditions
12
Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority

25%
(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.
(ii)The value of land is included in the amount charged from the service receiver.

Huge Benefit in the form of CENVAT Credit: Prior to 01.07.2012 also, rate of abatement was same i.e. 75% and taxable portion was 25% of gross amount (including land cost). However, earlier there was absolute bar on availment of CENVAT Credit.

However, now, CENVAT Credit in respect of capital goods and input services (as defined under rule 2 of CENVAT Credit Rules, 2004) has been allowed w. e. f. 01.07.2012. (CENVAT credit in respect of inputs shall not be allowed).

Usually, developers get the construction done from a construction contractor who charges service tax from developers in respect of construction services provided to developers.

Now, CENVAT Credit in respect of capital goods and input services (including construction service received which is a substantial expenditure) shall be allowed.

Now, developer shall continue to charge service tax from their customers, however, they will now avail CENVAT Credit and deposit lesser amount of service tax in cash after availment of CENVAT Credit. In other words, amount equivalent to CENAVT credit availed by developers will be net saving for developers.

Thus, developers discharging service tax must place a system for availing the CENVAT Credit as per the provisions of CENVAT Credit Rules, 2004.

Example: A Flat is sold for 10,00,000 including land value.After abatement of 75 % ,service tax on 25 % value @12.36 % Rs 30900/-charged by builder. As per notification 26/2012 given above,while depositing the collected service tax amount from the consumer ,Developer can claim cenvat credit on capital goods used and cenvat credit on services . 

Suppose Input Capital goods used and input services received to construct this flat is worth Rs 2 lakh. Cenvat credit available on 2 lakh @ 12.36% is Rs 24720. So Developer /Builder is required to pay balance only Rs 6180(30900-24720). 

After this amendment 26/2012 , there is a  direct benefit to builder/developer. In the given example benefit is of 80 % of the service tax collected from consumer . This benefit will increase / decrease with increased used of capital inputs and Input services in construction activities.In few case nothing is payable by developers.

So technically developer/builder should pass on this benefit to consumers.

Information for all Contractor/Builder/developer :We are informing this to all contractor/ developer /Builder so that they can avail this benefit so pay correct reduced amount of service tax to Govt.

Information for all Consumer and prospective Buyers :And most importantly to the consumer/Buyer of the Houses /flats etc so that they can know that in fact service tax liability of contractor/ developer is reduced in construction services after 01.07.2012 so that they can renegotiate their rate with the Builder/contractor/ developer. 

Hope you will find the above useful.

Best Regards,
CA. Vikas Khandelwal,610, GD ITL Twin Towers,B-08, Netaji Subhash Place,Ring Road, Pitampura 
Delhi-110034 Ph: 011- 27356481, www.vkcca.com E-mail: vkoffice3@gmail.com

95 comments: Post Yours! Read Comment Policy ▼
PLEASE NOTE:
We have Zero Tolerance to Spam. Chessy Comments and Comments with Links will be deleted immediately upon our review.

  1. I have booked a flat in month of June. THis month (July) I am going to do the Agreement or Registration.

    How reduced sercie tax will be going to help me?

    Regards
    Nitin Varade

    ReplyDelete
    Replies
    1. You should renegotiate with your builder and ask him to adjust benefit in flat amount. As you have understood that there is indirect reduction of service tax rate not direct so you should sit with him and explain him the reasons for reduction

      Delete
    2. You should renegotiate with your builder and ask him to adjust benefit in flat amount. As you have understood that there is indirect reduction of service tax rate not direct so you should sit with him and explain him the reasons for reduction

      Delete
  2. DEAR SIR
    Vatika ltd charging new service tax for booked flat which is under construction. car parking-3.09%,club membership 12.36% and BSP-3,09%.

    As parking and club membership not yet in service, why they are charging.

    is vatika apply the service tax correctly?

    ReplyDelete
  3. I got an under constructed house transferred to our name on 18th January, 2012 from a third party (not directly from Builder—Jaypee). First buyer has paid approx Rs 13 lacs before June 2010 without service tax, as service tax was not applicable at that time. Further payment made by the first buyer include service tax, I paid 13 lacs plus other amount paid by him to the first buyer, including the service tax paid by him and got the under constructed house transferred ( by endorsement) to me paying the transfer fee to the builder. Now after transfer, builder has deducted service tax on 13 lacs also, which pertains to the amount paid by the first buyer before June 2010.

    Please tell me whether service tax is payable on the prior payments (before the amendment in the act pertaining to service tax for construction of house property)

    ReplyDelete
    Replies
    1. No,as per service tax act/rule service tax on payment made before 01.07.10 is not liable to service tax .

      Delete
  4. Prior payments should not come but amt paid after the effective date will come under the perview.

    ReplyDelete
  5. I booked a flat in the month of June 2012 and signed an agreement with the builder on the same month after paying 20% of the total cost of the flat. Now the builder is stating that effective from 1-7-2012, the service tax is applicable for flats even with 2 houses. And he is asking me to pay the additional amount. As per my knowledge service taxes are applicable for apartments having more than 12 houses. I have 2 questions here:

    1. Is the service tax policy changed from 1-07-2012 for construction ?, If yes can you pls point me to the link where i can refer this policy change ?
    2. Also is it applicable for an apartment having 6 houses ?

    Thanks.

    ReplyDelete
    Replies
    1. Yes ,service tax policy has been changed from 01.07.2012. Now service tax is applicable if houses are more than one.

      1. Answer is yes ,link is given below.Check exemption notification 25/2012 list sr no 14(b)

      http://www.simpletaxindia.net/2012/06/negative-list-of-services-revised.html
      2. Yes , ST applicable if house is more than one.

      Further ,pls note that service tax on advance money paid before 01.07.2012 is not applicable.

      Delete
    2. Further check agreement ,if there is any clause in it that sevice tax if applicable at later date will be chargeable from you .If not ,then under which clause of agreement amount has been demanded .

      Moreover ,as explained in above post Builder can avail cenvat credit ,so ask him ,how much additional liability on him due on him and renegotiate the deal . He should at least bear 50% service tax .

      Delete
  6. I am a subcontrator in construction company how much service tax will be collect from main contractor

    ReplyDelete
    Replies
    1. if you are proving only service (not works contract) ,you should charge 12.36%

      Delete
  7. I have booked a flat in April 2011 , registered it in March 2012. Now builder is saying that all the payments after 31-March-2012 , will attract revised Service tax. As per your article it seems that revised rate is applicable if only for the payment post 1-07-2012. Please reconfirm my understanding. And if there is any reference to government circular mentioning the date of applicability , that would be really helpful.

    ReplyDelete
    Replies
    1. Rate was revised wef 01.04.2012 . General rate increased from 10.3to 12.36 % .

      As in construction service tax is charged at 25% of gross value ,so rates of 2.575 increased to 3.09% wef 01.04.2012.

      From 01.07.2012 rate has not been changed but builder can claim cenvat credit on services and capital goods .

      so effective outgo from builder is very much reduced ,so you can ask him that from 01.07.12 he should pass on benefit to you through discount.

      Delete
  8. I am a subcontractor of the builder and i am only providing all the materials including the labour what is the % of service tax i should charge and will the builder can avail the input against my bill. please send the details to my email id "gtcplmd@gmail.com"

    ReplyDelete
    Replies
    1. You are covered under works contract and rules are available here

      http://www.simpletaxindia.net/2012/08/service-tax-on-works-contract-valuation.html

      Delete
  9. Sir there is any abatement like excluding the land value we can avail 67% abatement is it continue still after 01.07.2012. Can u explain me.

    ReplyDelete
    Replies
    1. 67% abatement is not available .However 60% available under works contract for new construction

      http://www.simpletaxindia.net/2012/08/service-tax-on-works-contract-valuation.html

      Delete
  10. My Client in Construction has not collected Payment till the issuance of Completion certificate but he has made an entry for sale before issuance of completion certificate. Will he liable to pay Service Tax as per POT Rules?

    ReplyDelete
  11. I booked flat in last year i.e in 2011 and made agrement in dec.2011. The possion is getting in oct.12. Last year builder told that the service tax of 2.6% of agrement value and now he is asking for 3.2%.

    As the agrement is made in lat year so how can i applicable to pay additional service tax, is it valid?

    ReplyDelete
  12. Sir , i see you have been very generous answering all the posted queries. I hope you must answer my query . I resistered a flat on february 2012 . here in chennai UDS (undivided share ) concecept used most in resistration , for salable area 954 , i got a land of 522 resistered in my name . the cost of land is 7,63,200 , cost of construction is 22,89,600 and other costs are : covered car parking - 1,50,000, corpus fund - 25K , eletric connection - 50K and resistration - 75K . I paid arround 23,00,000 before Apr 2012 as per the construction progress . Now builder lastday surprised me saying that service tax will be arround 1 lakh and VAT will be arround 45 K . Please can you guide me how to confront the builder

    ReplyDelete
    Replies
    1. Present rate of Service tax is payable @ 3.09 % on total value for flat.

      till 31.03.2012 it was 2.575 %.


      Further VAT rate in Maharashtra is 1 % but it varies in state to state .

      Delete
  13. Sir, for availment of benefit of abatment, there is condition that no cenvat credit should be availed then only that benefit can be availed the how we can avail cenvat credit??????????????????? Please Explian

    ReplyDelete
    Replies
    1. We can bifurcate cenvat credit in three categories
      1.Cenvat credit on Input Goods
      2.Cenvat Credit on Input Services
      3. Cenvat credit on Capital goods.

      to avail benefit of abatement of 75 % in construction of complex , only restriction is on cenvat credit of Input goods (as given in type one).

      So there is no restriction on cenvat credit available on input services and on capital goods

      Delete
  14. Sir , if i have given amount X before apr 2012 to the builder for a under construction flat, but builder has not yet collected the service tax but is now collecting on month of october for all those amount that i paid earlier before april, shouldn't he charge me on old rate 10.3 % of 25% of total cost (land and construction cost) .

    Again if builder didn't listen to what I explain on recent amendment on cenvat rule , will that be reasonable to say builder that i will pay the service tax to govt directly , can this be really possible to submit service tax on myself by sideline the builder ?

    ReplyDelete
    Replies
    1. Builder will never listen you if you go to him single. He will listen you only if you go together with other buyers . Further as builder has already received the amount rate applicable on amount received before 01.04.2012 remain at 10.3(25%).

      Further you can not pay directly to service tax department.

      Delete
  15. thank you sir for your throwing some light in this area...

    ReplyDelete
  16. Sir,
    I had purchased flat in Hyd, area is 1063 sft. I taken a loan 20 laksh amount loan, Now the builder has demanded to pay the service tax as nearly 1,30,000. I really surprised heared this amount. So can you give me the details and how can i approach a builder?

    ReplyDelete
    Replies
    1. You have not provided the cost of the house , date of purchase , amount paid to builder with dates .so pls provide full information.

      Service tax rate on under constructed house is 3.09 %

      Delete
  17. Thank you sir.
    Here I provided below all the details of my flat.
    Total Flat cost is 25,80,000 and agreement had taken place on 23rd Jun 2012. while agreement I had paid 4,00,000/-. After that I taken a loan for 20,00,000 and the registration had taken place on 30th July. while going to registration he demanded the amount is 1,30,218 for service tax. How can he explained to me is the flat of market value is 10,63,000(in the sale deed they mentioned) and calculate service tax with 12.25% on this amount. At that time i argued, but no use. So finally i had paid the amount(only cash) and registration taken place. Now flat is ready to occupy. Builder asking to pay the remaining balance is 1,80,000. So I need your suggestions.

    ReplyDelete
    Replies
    1. As the flat cost is 2580000 ,so service tax on this should be

      (i)2580000*12.36%*25%=79722

      (ii)or you can pay (flat total value -land value)*12.36%

      but as the option one is lower ,first option should be availed .

      Delete
  18. Thank you sir. I will go with your suggestions.

    ReplyDelete
  19. Hello Sir,

    I found a project in E.City, Bangalore. The apartment construction is just kicked off. Only foundation laid.. The builder quotes as below.

    1. Basic Cost (2,500 x 1,000) = 25,00,000
    2. Parking + Water + Elec = 3,00,000
    -----------
    Total (A) = 28,00,000
    -----------
    3. 5% VAT on (A) = 1,40,000
    4. 3.1 % Tax on (A) = 86,800
    -----------
    Final Cost (B) = 30,26,800
    -----------

    I have not Paid any amount towards booking as on today. Planning to go ahead next week. Now please explain me how I can explain and get rebate on the Tax and VAT part from the builder.

    Note: From the conversation with builder I believe he himself do the construction (not sure). If so can we ask him fully wave off ST??

    ReplyDelete
    Replies
    1. Most of builders have a impression that if they charge service tax at 25% of 12.36=3.09 then they can not claim cenvat . You should inform that You(builder ) can claim cenvat on input services and on capital goods . And if they claim the cenvat then their actual liability will reduce and same should be pass on to you.

      However please note that as per rule he can not reduce rate of service tax (3.09) ,so ask him to pass on this benefit through reduced basic cost.

      Delete
  20. This comment has been removed by the author.

    ReplyDelete
  21. Dear Vikas: I have entered an agreement for purchase of Flat in Oct 2009 and subsequently got sale deed done towards the land value (35%) in Dec 2009 (paid registration tax) and had entered separate construction deed (65%) at the same time Dec 2009 (paid vat on construction agreement). Subsequently i keep paying the payments as per completion terms. No where so far service tax is levied separately by builder. Now i am asked by builder to pay service tax when i am going to pay balance 5% as per terms to takeover the occupation. Now Builder is demanding to pay around Rs. 2,13,995 towards service tax. He says sale deed / construction deed clearly stated that later if there are any service tax applicable builder is right to collect. Can you advise i) on what basis service tax is applicable ii) is it on accrual or on payment of the money to builder iii) what rights do i have on this if builder demans iv) can i ask builder to give official demand note along with basis of calculation?

    ReplyDelete
  22. Booked flat on June 2012 with 20% + service tax @ 3.09% + additional service tax on value of floor rise @ 12.36%. Alsom, paid balance 80% in July 2012 with 3.09% service tax and 12.36% additional service tax on value of floor rise. Now I've got credit of 9.27% (i.e. 12.36%-3.09%) 80% paid in July 2012 for value of floor rise...what about 12.36% service tax on value of floor rise which I have paid in June 2012...am I eligible ?

    ReplyDelete
    Replies
    1. For June same rule was applicable.so same also be refunded to you.

      Delete
    2. What is effective date for above rules / for refund if booking made in June 2012 ?

      Delete
  23. Dear Sir,

    I booked my flat in february 2012, at that time my builder charged 5% VAT and 3.45% Service Tax on the Baisc Cost(Area in sq.ft * Price per sq.ft).

    Now he is asking 4.94% as Service Tax. As per my builder, ST has increased. But the aboe article says, Service Tax reduced effective 01.07.2012?

    Could you please clarify?

    Thank you

    ReplyDelete
  24. Hello Sir,
    My self Hitesh Shah. I have booked under construction flat in March 11 and got it registered in Dec 2011. The flat cost is around 30 lakh. I have below queries :-
    1) Which Rate will be applicable i.e. 10.36% or 12.36%. Bulider has aksed me to pay by 12.36%
    2)Can i talk to builder to negotiate the amount on the ground of revised cenvat rules
    3)Will i get any receipt of payment of service tax.

    Hitesh Shah

    ReplyDelete
    Replies
    1. On amount paid before 01.04.2012 tax rate @ 25% of 10.30 should be applicable on amount paid after tax rate 12.36 @25 5 applicable .

      in above reply ,we assume that house is completed after 01.04.2012.If house is completed before 01.04.2012 and contractor has billed you before 01.04.2012 then 10.30 is applicable on full value.

      2)Cenvat is available after 01.07.2012,so at least you can try.
      3.You will get receipt from builder not from department.

      Delete
  25. Dear Raja babu sir,

    I had booked a flat Sep 2011 during construction phase and its total cost is 32 Lakhs + reg + vat + service tax.
    Builder is saying now we have to pay a vat = 5% and ST = 3.5% on the total flat cost. And registration cost would be some 6% on the current land rate in that area which is around Rs.1700 per sft + the car parking 1,30,000.

    Briefly:
    Flat Cost 32 Lakhs.
    Reg cost calculation = 1200 sft *1700(govt. rate in that area) = 20,40,000 +
    car park = 1,30,000
    So total value for registration calculation = 21,70,000. = Amount A
    6% of amount A = Rs.1,30,200 (this is the registration cost)
    And he is charging a total of 8.5%(VAT + ST)on the total flat cost. which comes around Rs. 2,72,000. (8.5% on 32 L)

    Please clarify how much exactly i need to pay to the builder if my flat is 1200 sft and total cost is 32 L. thank you very much in advance. Regards, Ram.

    ReplyDelete
    Replies
    1. If you are in Maharashtra , then good news is that wef 01.04.2010 vat rate is only 1 % (one).So you should ask builder ,why he is charging 5% vat.

      Further service tax rate is 25% of 12.36=3.09%

      Delete
    2. Further any amount paid before 01.04.2012 ,service tax rate applicable is 25% of 10.30% =2.575%

      Delete
  26. Raised my question earlier but I am still confused...
    I have booked flat on "27th June 2012" with 20% of flat cost which includes service tax @ 3.09% of 20% base cost and additional service tax @ 12.36% on value of floor rise. Allotment letter was given to me on "3rd July 2012". Thereafter I have registered agreement by end of July 2012 and paid balance of dues i.e. 62.24% in "July 2012" (as 82.24% project was completed in June 2012) with service tax @ 3.09 of 62.24% base cost and additional service tax @ 12.36% on value of floor rise. Later, Builder have given me credit of 9.27% (i.e. 12.36% less 3.09%) on payment made in July 2012 for value of floor rise i.e. 62.24% of floor rise value. I would like to know that whether I am eligible for credit of 9.27% service tax on value of floor rise i.e. 20% paid on 27th June 2012 or not ? I would appreciate your quick response.

    ReplyDelete
  27. Dear Raja Babu SIr,

    I am going to puchase a flat which is under mortgage. The registeration will be done on completion of consruction and receipt of completion certificate. am i laible for STAX payment.

    ReplyDelete
  28. I am going to purhase a flat after getting the completion certificate. Kindly confirm am i liable for STAX

    ReplyDelete
  29. Hello sir,
    I am going to purchase under constructed flat (9,37,500 Rs) and i will get Possession in march. I have paid 15%(1,40,625)+(4345 Service Tax) of this amount in Nov 2012.
    now i will take finance of remaining amount 85%(7,96,875) from bank,i listen somewhere that we have not to give service tax on finance amount which is given by bank.Is it True?
    means i have to give remaining 85% amount to builder only or also give 3.09% Service Tax on remaining 85% amount.
    Please sir give me answer,i am very confused :(

    ReplyDelete
  30. Dear Sir,
    Which of following are exempted from service tax.
    BSP ---
    EDC /IDC (govt dep)-----
    Car Parking----
    Additional Terrace -----
    IFMS---
    Power Backup--
    ECC/FFC-----
    Club Membership---
    of these which fall under 12.3% and which on under 3.09% . Booking june,2012

    ReplyDelete
  31. Hi,

    I have paid a booking amount to my builder before his obtaining Completion Certificate and the rest I will pay after he gets partial Completion Certificate for my Flat.

    Am i liable to pay Service Tax to the builder on the whole amount or only on the amount given to him before obtaining partial CC?

    ReplyDelete
    Replies
    1. You have to pay service tax on full amount paid to builder for flat @ 3.09%

      Delete
  32. Hi,
    I had paid a booking amount on 21st July & the rest amount for my flat I will pay after my builder gets partial completion certificate for my flat. Am i liable to pay 3.09% service tax on entire amount or the amount before partial CC only? Do let me know urgently if you please, because my builder is really harassing me in this respect.

    ReplyDelete
    Replies
    1. Yes , For Flat/residential house 3.09 % rate is applicable. Builder can not charge more than 3.09%

      Delete
  33. Hi Team

    I have read the comments and understood why the builder is charging me 3.09% on the total amount (SFT charges+ Amenity charges)

    But should the builder be excluding the charges on undivided Land cost?
    Also with this calculation, builder is not passing the benefit of CENVAT to the buyer right? Can we negotiate that with the builder?

    ReplyDelete
  34. I have purchased one flat in gurgaon hich is still in soft launch. When I asked them to transfer on my name they are collecting transfer changes 50/sq feet. Which I agreed since there is no choice but to pay but concern is they are charging 12.36 % service tax on transfer amount.

    This property is not yet launched and contruction has not yet started. Is this transfer comes under service tax.?

    ReplyDelete
    Replies
    1. As you have purchased under constructed house all payment made to contractor regarding flats are subject to service tax .

      Delete
  35. I've booked one flat from Builder on May'12 & I paid the 20% payment with service tax as 3.09%.
    I've made he partial payment of Car Parking with Service tax charged as 3.09%.
    Now builder is saying service tax has been increased to 12.36% & he has charged service tax as 12.36% for the next partial payment of the car parking & he also said the rest other charges like IDC,EDC, Power backup etc will also be charged with 12.36% service tax.

    ReplyDelete
  36. I have purchased one property in the year 2007 and made full payment. However, Sale deed could not be executed due to intervention of the Court. But the matter is decided and now I will be executing the sale deed shortly. Since the the entire payment is made in 2007, and the service tax on property is effective from 1.07.2010, whether I am required to pay any service tax now.

    ReplyDelete
  37. I have purchased one property in the year 2007 and made full payment. However, Sale deed could not be executed due to intervention of the Court. But the matter is decided and now I will be executing the sale deed shortly. Since the the entire payment is made in 2007, and the service tax on property is effective from 1.07.2010, whether I am required to pay any service tax now.

    ReplyDelete
    Replies
    1. AS you have made payment before 01.07.2010 ,no service tax is applicable now

      Delete
  38. Hi,

    Registration charges, VAT, Service tax spent and Loan EMIs for new flat which is under construction will come under any income tax deductions? I

    ReplyDelete
  39. Sir,
    My client is a developer and has entered into a Joint Venture with the land owner. Now, Should he pay service tax even on the portion given to land owner. If yes, then can he collect the same either from the land owner or the buyer? 3.09% from for the sale of flat to buyer and 2.06% from buyer for the share of land owner? total 5.15%!!

    ReplyDelete
  40. Sir,

    Are VAT & Service Tax applicable for flats registered after the Commencement certificate(CC) was received? Basically, it was a sale agreement & the payment was not done slab wise. Payment was done full & final, after which I immediately received the possession.

    Thanks in advance.

    ReplyDelete
  41. Dear Raja Sir,

    I booked my flat in August 2012, builder is asking 4.94% as Service Tax. Can you please tell me how much service tax i have to pay as per Andhra Pradesh Govt rules. Is it 3.09% or 4.94%. Your answer will be very much helpful to me. Thanks in Advance sir and really very nice information in your post.

    Can you please clarify?

    Thank you

    ReplyDelete
    Replies
    1. As per rule 3.09 % is payable not 4.94%

      Delete
  42. Dear sir please tell me , can builder reimburse service tax from me, flat is under construction booked in oct-2012. total value of flat is 25. lac advance paid 5.00 lac

    yogesh

    ReplyDelete
    Replies
    1. Yes builder can charge service tax from you

      Delete
  43. Dear sir,

    I have booked flat in jan-2013 with registration value 17lakhs(in sale deed) and market value 30lakhs(which I am paying) in Hyderabad. It is still under construction. Now builder is asking me to pay 84000 as 4.94%@17lakhs.
    How to calculate service tax?

    Thanks

    ReplyDelete
    Replies
    1. Service tax is payable @ 3.09 only

      Delete
    2. Dear sir,

      In my flat case, Landowner and builder .He made GPA with builder to build apartment and give share as some flats so that landowner also able to sell flats. So now landowner is saying that it is differnt from normal selling and asking me to pay service tax @4.94%.
      I asked for clear details,but he is saying his auditor is saying so he need to collect. He said that giving bill or challan is not possible as they already paid tax and now collecting from buyers.

      Is there anyway to get out of this problem?
      Please help me sir.

      Thanks

      Delete
  44. Hi,

    I recently purchased a "ready for possession" flat in Mumbai. Builder has charged me an service tax @3.09% on construction service on the base price.

    Kindly suggest if service tax on construction service is applicable on purchasing ready for possession property also.

    Thanks

    ReplyDelete
  45. Dear sir,

    Dear Sir
    I have booked flat in May -2012 in chennai.The total flat cost is 34 lakhs and paid 20% amount in June and for balance amount,i applied for the loan.The UDS registration has done on June end.Now the construction is going to complete. My friend booked the flat in August-2012. Now builder asking the service tax to my friend.Since i have booked the house earlier may 2012,Builder told me that he will check with respective goverment office and confirm about my service tax.Kindly confirm is it necessary to pay service tax in this case.Kindly advice

    Thanks

    ReplyDelete
    Replies
    1. SERVICE tax is applicable in both cases

      Delete
    2. Sir
      I am not sure, to whom we are paying the service tax.If builder is not asking the service tax,i no need to pay the service tax.Is it correct?

      If i am not paying the service tax to the builder , what will be the impact in future.

      Delete
    3. yes , you right , if builder is not asking or demanding service tax then you have no responsibility to pay directly to govt . primary responsibility is of builder.

      Delete
    4. Thank you very much for your quick response.
      Builder is going to handed over the flat on Mar1-2013.
      Builder told me that he will not give completion certification which is given by government. Builder told me that he will give on his own letter pad.Is this document is enough for future?
      More over later we are going to apply for property tax assessment. legally is those documents are enough for flats in aprtment? (or) during property tax assessment time,will they asking question related to service tax?

      Once builder handed over the flat to me, Later will they have rights to ask for service tax in future?

      Kindly clarify..Thanks !!!

      Delete
  46. Sir,

    I have booked an Duplex Bunglows. Builder has given construction agreement is of Rs.17.5 Lacs. As per new rule he said you have to pay service tax @ 4.95%. Even he said give money in cash because I have to pay service tax of other houses togehter.Kindly guide me should I pay as per his condition?

    ReplyDelete
  47. Hi,

    I have booked a flat in Oct'2007 and total flat cost was around 44L. I have paid 12L by 2011 and I went for loan in Nov'12 where bank released 26L as first disbursement. I just want to know the service tax, vat and registration amounts. Currently the flat is still under construction. Buiilder has divided the registration charges in this fashion:
    1) saledeed - 18L (stamp duty @ 7%)
    2) Construction Agreement (CA)- 26L (stampduty @ 5%)
    Total reg comes to : 2,71,000
    Service tax : 135000
    VAT : 50,000

    My questions :

    1) Do I need to pay stamp duty on both the sale deed and CA
    2) Can i reduce the registration amount, what are possibilites?
    I heard we can register for semifinished flat where reg cost may
    come down?
    3) Is service tax applicable on the amount paid before 31/7/2012

    Kindly advice.. Thanks

    So do I need to pay the stamp duty on both these

    ReplyDelete
  48. Sir, Is it mandatory to pay service tax and vat amount before registration

    ReplyDelete
  49. Hi all

    I took a flat near Tarnaka, Secunderabad. The total cost is Rs 56.5 L.

    I had paid 55L (white money) till now and have to pay Rs 1.5L.

    But today i received a letter from builder that, I have to pay around 2.5L as Sales & Service tax for the 55L what I had paid.

    Sales tax @1.25 on 55L and Service tax 3% on 55L.

    As I am hearing this for the first time, please clarify whether is it necessary to pay this. I am totally confused seeing this unexpected charges.


    Please share your opinion. It will be of great help to me.


    Thanks

    ReplyDelete
    Replies
    1. If flat is completed then service tax /sales tax is not applicable .

      If flat is under construction then service tax @ 3.09 % and sales tax as per your state will be applicable.

      Delete
  50. Sir
    Builder is going to handed over the flat on Mar1-2013.
    Builder told me that he will not give completion certification which is given by government. Builder told me that he will give on his own letter pad.Is this document is enough for future?
    More over later we are going to apply for property tax assessment. legally is those documents are enough for flats in aprtment? (or) during property tax assessment time,will they asking question related to service tax?

    Once builder handed over the flat to me, Later will they have rights to ask for service tax in future?

    Kindly clarify..Thanks !!!

    ReplyDelete
    Replies
    1. Property tax have no relation with service tax ,so don't worry about it . Service tax if not applicable now then no question of demanding it in future .

      and if service tax is applicable now but not demanded by builder then we should not have problem to pay the same

      Delete
  51. Dear Sir
    I have booked flat in May -2012 in chennai.In that apartment 5 houses only.The total flat cost is 34 lakhs and paid 20% amount in June and for balance amount,i applied for the home loan.The UDS registration has done on June end.Now the construction is going to complete.Builder is going to handed over the flat on March 15th 2013.
    Now builder coming and saying , government has changed the rule on 01-07-2012.So he is asking the service tax(12.36%) of 40% of total cost.I have below questions.Kindly clarify

    *I have booked the house earlier may 2012,The new rule has announced on 01-07-2012.Then how the new rule is applicable for me?.all the agreement and registration has done before July.Kindly confirm is it necessary to pay service tax in this case.

    * Builder has not mentioned anything related to service tax in the sale deed & construction agreements. Then how he is asking now?
    * IS it necessary to pay service tax for 40% of total cost?
    * In the total cost builder has added the EB and water charges also, for that also i need to pay the service tax.Kindly clarify
    * In your previous statements, you mentioned about cenvat credit? What is that cenvat credit? How i can calculate?How much i can reduce in paying the amount to the builder?
    * Kindly let me know the way to reduce the service tax amount
    * Kindly let me know, paying service tax is whose responsibilty.Whether with builder or buyer?If i am not paying what will be the impact?

    Kindly clarify my questions

    Thanks !!!



    ReplyDelete
  52. Dear Sir
    I have booked flat in May -2012 in chennai.In that apartment 5 houses only.The total flat cost is 34 lakhs and paid 20% amount in June and for balance amount,i applied for the home loan.The UDS registration has done on June end.Now the construction is going to complete.Builder is going to handed over the flat on March 15th 2013.
    Now builder coming and saying , government has changed the rule on 01-07-2012.So he is asking the service tax(12.36%) of 40% of total cost.I have below questions.Kindly clarify

    *I have booked the house earlier may 2012,The new rule has announced on 01-07-2012.Then how the new rule is applicable for me?.all the agreement and registration has done before July.Kindly confirm is it necessary to pay service tax in this case.

    * Builder has not mentioned anything related to service tax in the sale deed & construction agreements. Then how he is asking now?
    * IS it necessary to pay service tax for 40% of total cost?
    * In the total cost builder has added the EB and water charges also, for that also i need to pay the service tax.Kindly clarify
    * In your previous statements, you mentioned about cenvat credit? What is that cenvat credit? How i can calculate?How much i can reduce in paying the amount to the builder?
    * Kindly let me know the way to reduce the service tax amount
    * Kindly let me know, paying service tax is whose responsibilty.Whether with builder or buyer?If i am not paying what will be the impact?

    Kindly clarify my questions

    Thanks !!!

    ReplyDelete
  53. same to me what should be done next ?

    ReplyDelete
  54. Dear Sir,

    I am builder, we purchased land from Authority, and sale Residential Plots and , Group housing Plots and Commercial plots, like hospital, School and etc.

    First i want to know which head apply for service tax registration.
    and which services on service tax applicable or not.

    1. Sale of Residential Plot
    2. Sale of Group housing Plots
    3. Sale of Commercial Plots
    4. Other Charges :
    ( A ) Internal development Charges ( IDC )
    ( B ) External Development Charges ( EDC )
    ( C ) Electrical Substation Charges ( ESC )
    ( D ) One Time Lease Rent ( OTLR )
    ( E ) Club Membership
    ( Interest Free Maintenance Deposit ( IFMD )
    Please help me about above matter.

    Rajeev Singh

    ReplyDelete
  55. Dear Sir,
    I am just developer. I want to know whether ST applicable to me and VAT (Karnataka)?

    ReplyDelete
  56. Dear Sir,
    I am a purchaser of under construction property and my agreement value is 1600000 which is to be registered on april 2013.Could you please provide me the details about VAT, Service Tax & LBT to be paid by me.Is there any way to reduce it?

    ReplyDelete
  57. hallosir
    ihave purchased two flats in35 lacs . the appartment have total 6 flats only can i applicable for service tax ? if yes how much ?

    ReplyDelete
    Replies
    1. from 01,07,2012 if a complex has more than one flat then service tax is applicable

      Delete
  58. i have booked flat on 27 may 2012 wid adv. 3lakh and total value of flat is 17,5000 and 1lakh parking .. So i want to know that how much service tax will be charged by the builder ..

    and let me know that will service tax wil be applicable on parking amount also

    If builder is not giving Cevat beneft so what a buyer shld do for that ..

    ReplyDelete
  59. I've purchased a new flat in visakhapatnam for Rs 32.49L @ 1805Sft x 1800/- and sale deed was issued @ Rs 16.50 L on which Regn , Stamp Duty @ 7.5% & VAT @ 1.25% was paid in Feb 13. I've taken additional construction agreement @ Rs 16.00 L to acquire higher loan. Now the builder is demanding Rs 1.05L as ST and the flat shall be delivered by 2-3 mths with other flats. Kindly advice do i need to pay @ 3.09% on the total cost of the flat or on just the sale deed @ Rs 16.50L where regn , stamp duty & vat taxes had been paid.

    BR
    Murali
    dmk_1973@hotmail.com

    ReplyDelete