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Author Topic: Reagrding the service tax of a flat purchased under construction  (Read 10703 times)

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Offline srinivasjr04

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Dear Sir/Madam,

I have purchased a flat from a builder in Bangalore. which was under construction and entered in to an agreement with the builder on 17th July, 2011 and the same "Sale agreement" was registered on 4-Nov-2011.
While making agreement neither mentioned in the agreement nor informed by builder about service tax. In agreement in cost break up it is only mentioned about 4% VAT and parking charges , electricity charges etc. but no word about service tax. Now the building construction almost completed and in occupiable postion (Still some pending works, which doesn't create much inconvinance like Drinking water (Cauvery water) connection not yet given etc to live in, the lift provided is not up to the mark quality and functionality). For the same,  I have paid all the money as per agreement and a "SALE DEED" made and got registered on 23rd Oct, 2012 with the BBMP, based on the promise made by builder to finish the pending works due course of time and also occupied by self and now living there. But Builder is still not yet completed those pending works as promised in the agreement. when we ask him to finish those works, now he is asking us to "pay the service tax (Comes around Rs. 1.3 Lakhs) which I didn't collect that time. Unless untill you pay the service tax I will not finish the pending works".
When we asked the builder "regarding service tax we dont have any word in our agreement, now why you are asking that, We assumed that the base price is inclusive of taxes or levies which are not explicitly mentioned". But Builder replied "I forgot to mention about service tax, recently I have received a notice from the government to pay the service tax, so now I have to collect it from you people". FYKI, He already constructed 4 apartments (during 2009 - 2011), to say that he forgot to collect the service tax, Our apartment is the fift one.
I request you to advise on how to go about? Does he have right to ask the service tax now. (If requiered I am ready to share the SALE AGREEMENT" soft copy with members of the forum.
Please help us.
Thanks & Regrads
Srinivasa Reddy

Offline advjaya

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Re: Reagrding the service tax of a flat purchased under construction
« Reply #1 on: October 22, 2013, 08:09:13 PM »
The buyer is liable to pay the builder Service Tax at the time of purchase of property, which the builder will in turn deposit with the Govt.
And if the Builder does not collect Service Tax separately, it would imply that the amount paid by the buyer is inclusive of Service Tax. so if you don't pay additional service tax to the builder and the sale deed has been registered, he would have to pay out of his own pocket
Madras High Court Advocate

Offline advocate-lyngdoh

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Re: Reagrding the service tax of a flat purchased under construction
« Reply #2 on: October 22, 2013, 08:43:20 PM »
The Finance Bill 2010 has acquired presidential climb on 8th May 2010 and therefore a new section in challenging smooth selling has began .In the meaning of the taxed solutions of  ‘Construction of Complicated service’ [section 65 (105) (zzzh)], and ‘Commercial or professional growth service’ [section 65 (105) (zzq)] given in the Fund Act 1994 now  states that growth of home (in any type – residence / smooth / row home / etc) by a designer in a complicated is a “service”, and presented the support tax of 10.3% on such a solutions .
There would be no impose of the support tax, if the whole quantity for the residence buy is compensated after the invoice of a finalization certificate
The low-cost real estate section (property value less than Rs. 20 lakh) will be completely exempt from support tax.
This tax would not be appropriate to resell qualities, as resell qualities would basically have acquired a finalization certificate
Since, 75% of the quantity billed by the designer is regarded to be price of area, components,  you would pay 10.3% support tax only on 25% of the quantity that you have compensated.
Service tax will be appropriate for only under-construction qualities and not for finished models.
Special solutions offered by a designer etc. to the potential customers such as offering preferential place or exterior or inner growth of buildings on additional expenses [Section 65 (105)] have also been introduced as new support under support tax net.Service tax of 10.3% has also been billed on any transaction created by you to the designer for getting a preferential place for your home / smooth.
Any quantity compensated for getting an residence on a greater floor
Any quantity compensated to get a smooth / home with a particular number
Any quantity compensated to get a smooth / home experiencing a particular service, say a share, pond, recreation area, sea, etc
Any quantity compensated to get an residence / home experiencing a particular route (maybe as per vaastu)
No support tax on quantity compensated for vehicle parking garage area.
Advocate Lyngdoh
Laitumkhrah, Shillong


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