sreekys

Hi,

I am unable to understand one aspect of service tax that has been introduced in the recent budget.

If a home buyer has purchased a under construction property last year and already the agreement has been registered and stamp duty also has been paid last year. Is this tax going to raise the price of such a property. If yes are the builders going to absorb it or this will come to the buyers.

Awaiting your views...

kauban

Ekta Builders (Lake Homes, Powai) is asking for a FD for 4% of agreement value against possible VAT (depending upon the court case) + blank cheque against possible service tax being levied

razer

Have you spoken to this builder after the 1% VAT rule?

Sharpj

He is being adamant on the FD. Basically one needs to have an FD and create a lien for that FD in his favor. FD is 4% of agreement value for the VAT.

I am not sure if such a move is legal, but it is unfortunate that he springs this just before posession and says he will not hand over possession unless the FD is in place even if you have paid all the money.

Regarding Service tax look the link from the budget
http://indiabudget.nic.in/ub2010-11/cen/dojstru2.pdf

It is still not clear what is applicable and how they will calculate.

Regards

snk1974

Hi,

I had purchased flat in Dec and waiting POssesion letter from Builder,

Can builder ask me for service tax, if yes legally it is correct.

Becuase I had already made my agreement and Stamp duty paid.

Required your views on this .

Sharpj

Hi,

Currently the Service tax notification is yet to passed in the parliment and will happen in July. Only then it will be clear as to when it will be applied. This is a tax on the service (apprently) by the builders. Builders are right in passing this on to the buyers. The builder has to just collect the money and pass it on to the government.
I know it sucks and yes it is not something we want.. Nobody is clear and the builder should not ask or demand for any money towards service tax now and has to wait for the notification from the government.

Builders are already going ahead and demanding money which is not correct in my opinion but I am just a common man

Regards

sreekys

You are right that there is no clarity yet on this issue. Of course the builder community is thanking the govt for reducing the assessment value from 33% to 25% and actually trying to sell this to the buyer as a great incentive! Trust our builders to turn the tables!!

vdpawar

I have recently bough the flat and builder is eligible for 90% payment.

So does it make sense for me to pay the amount before June 30. I m asking because I think Service tax is retrospective and applied on the amount to be paid in future.

I will not have pay tax on 90% of the payment and the reamining 10% wuill b in the taxnet. So will save (90%*2.5% of the property value)

Pls help

Sharpj

No do not pay all your money to the builder.. you lose your leverage.. do it if you are able to get a hefty discount.. else you lose out..

It is not just you paying all the money.. but also the fact that if you pay money before the necessary approvals are obtained from the authorities.. (not June 30th)..