Book under construction flat before July 2010 to avoid 3.30% Service tax on Agreement Value
Book under construction flat before July 2010 to avoid 3.30% Service tax on Agreement Value
By Taxguru.in
Those looking to buy a house would do well to book one before July, when the new service tax levy on construction service will come into effect. The cost of flats will go up 3.3% of the total purchase consideration once service tax begins to be levied on construction.
The government is considering exempting from tax flats booked before the notification of the expanded construction service, a finance ministry official told “There is a case for giving relief to buyers who booked their houses before the service is notified… We are examining it,” he said.
So, a buyer who has booked a flat but will get possession only after the notification of the new service need not worry. A clarification to this effect may be issued when the tax is notified after the passage of the finance bill, he said.
The Union Budget proposes to expand the definition of construction service and levy tax on houses under construction as well. The new rule, which will come into effect when Parliament approves the budget, says service tax would be imposed if payments were made before the completion of construction.
Realty companies typically sell property before they begin construction and fear that the move will hit the sector hard as it would lead to a rise in home prices and depress demand. “The government must reconsider its decision to impose service tax on under-construction housing as the real estate industry is already paying 14-16% as indirect taxes. The current move will make affordable housing unaffordable in the future,” said the DLF spokesperson.
The government plans to include charges such as development fee, parking fee and premium location charges usually paid at the time of completion of construction in the base price. Only 33% of the base price of the flat will be chargeable to service tax levied at the rate of 10%, taking the effective tax to 3.3%.
“Since an amendment has been made in an existing service already under tax net, there are diverse views whether this will be operative from a specific date after notification or treated as a clarificatory amendment roping in construction-linked payment plans of houses under construction,” said Anil Kumar, CEO and deputy managing director, Ansal API. If it is to be operative from a prospective date, booking a house in the next 3-4 months may result in savings of up to 4% for a customer, he added.
However, the government remains firm on levying the tax. Revenue secretary Sunil Mitra said the proposal would not hike prices by more than 3.5%, an increase that could be afforded by the customers.
“Construction is a service. As a service, there is no reason why it should not be taxed,” he said. “It is only 3% or 3.5% that gets added up (for the buyer),” Mr Mitra added.
Dear Sir
I want to book a flat in under construction apartment, which shall likely to be completed within next 02 years. builders says that amount is required to be paid in installments and final installment shall be paid on occupation of flat. please intimate whether service tax @ 10.3% is required to be paid to builder or otherwise.
Hi I have booked a flat in march 2009..and will be paying remaining 2 lacs in August 2010 .will i be chrged for 4% service tax..as builder is demanding for that…Plz suggest.
Hi, I have booked a house on April 2009. I have paid two part payment in 2009. now the actual disbursement form bank starter in July 2010. now I have been told to pay the service tax.
weather I have to pay or not.
kindly advise me.
I have booked a flat on 25th May 2010.My property is under construction and the possession is due by September 2010.
The agreement value of the property is of 19.00 Lac. I paid 51000 and 1,81,000 in the month of June.
Now my builder says that I need to pay VAT of 1.5 % on agreement value and service tax of 3.3% on agreement value.
I have invested all of my money in down payment and rest I took loan from LIC.
Please help me by providing me information on VAT and SERVICE TAX.
Kindly suggest me what do I need to do.
I Have booked Apartment on May 2009 and all the instalment has been paid in March 2010,and my Registry date is 08.07.2010,now i want to take posssssion but builders says that i have need to pay Vat & service tax, pls help me what i need to do.
hi,
I have booked flat on April2010, the total amt of flat is 20L I have paid three installment before July 2010 by Cash and loan by Axis bank and One installment of Rs. 1.5L after July 2010.
So how many amount I need to pay as a Service tax?? Please help me…
Dear Sir,
i have booked my flat in March 2009 and i have made agreement too , Now builder is reday to give me a posession within 10-15 day’s after clearing the balance payment. Could you please reply me whether Service tax 2.58% will be applicable on Amount which i paid after 1-July-2010.
Dear Sir,
i have booked my House in Oct 2009 and i have made agreement in Oct 2010 , Now builder is reday to give me a posession within 2-4 day’s after clearing the balance payment. Could you please reply me whether Service tax 2.58% will be applicable on Amount which i paid after 1-July-2010.
Dear Sir,
i have booked my flat in Aug 2009 and made agreement in Oct 2009 , Could you please suggest me whether Service tax 2.58% will be applicable to me on the Amount which i paid after 1-July-2010.And also whether the 1% VAT need to be paid.
I have booked my flat in the month of April 2010 at that time I payed 15% of the total cost including registration cost.
I will get my possession in the month of July 2011. Do I need to pay the service tax?
Sir,
I have booked a flat in JUne 2010 with Rs.75000/- as booking amount. An amount of Rs.275000/ was piad to builder on 30.6.2010 by cheque and the same was received on 30.6.2010. I want to raise a query whether the service tax will be payable on the amount of Rs.275000/- for which cheque was encashed by the bank on 05.7.2010 but builder received the same on 30.6.2010.
Dear Sir,
I have purchased a new house in Oct 2011 and registered, paid the entire amount in Jun 11. Can u please guide me about my tax liability as per the recent verdict on service tax .
I have registered flat on may 2010, and possession will get in march 2013. Now builder is asking to pay service tax. Please let me know I am liable to pay service tax as I have registered property before July 2010. Please relpy. Thanks
sir, i have booked 1400 sq feet under construction flat for rs. 34 lacks in july 2010. i have already paid this amount. but, building is still under construction. flat registration is still pending. could you please suggest to me how much service tax and vat i will pay to the builder ? thank you.
Dear Sir,
I have book flat in dec.2010 and register in march 2011 ,and now 15 days of taking possesion of flat , now builder asking for 3.30 % sevices tax , kindly give the some time to coustmer the arrange money for this service tax payment like 6 month because this is not a small amount to paid . Kidnly goverment also give the time to new purchaser for arrange this amount immedete because we have done most of amount loan and now govement extra burden which will be come immedetly . govemet consider this is request