Service Tax on Under Construction Flat booking - Page 2 - Indian Real Estate Forum

realacres · 27-02-10

If ST is only on construction, then builders will quote constro cost as 500/sq ft. Also, to my knowledge, if there is lease/JV type agreement between builder & land owner, then also such leasing will be taxed at 10.3%. However, the SEZs are exempted from all this.

Quote:

Originally Posted by punetesting

Hi,

Anyone having idea, how will service tax be calculated for row-houses? For flats it will be 10% on approx 34% of flat cost.

Also, it seems it will only be paid for payments after 1st April. What if flat is 90% ready before 1st april i.e. developer has provided 90% service before 1st april?

Row house & flat will be at par. I don't know about individual bungalows/villas though (this can be managed in any case

). Rest you said about completion, yes it will worry the builder but if the agreement has already been made, then the buyers need not worry as the builder will have to pay from his pocket

. Good that there is atleast someone to loot builders as well

.

Venkytalks · 27-02-10

It may not be applicable for all flats, there is no clarity. More info here:

http://www.indianrealestateforum.com/noida/t-budget-2010-10201.html[/url]

sanav3 · 27-02-10

in the short run this would boast resale market ...
With Budget 2010, tax slabs increased, will be increased even further next year with DTC, tax deductions because of Home loan might be rolled back...So the advantage of buying a house for saving tax are reducing

Looks like the incentives for buying a flat are going away gradually.
Good for genuine buyers who actually need a flat for consumption as demand shall decrease and rates should reduce

realacres · 27-02-10

Quote:

Originally Posted by sanav3

Looks like the incentives for buying a flat are going away gradually.
Good for genuine buyers who actually need a flat for consumption as demand shall decrease and rates should reduce

Yep & this will prove useful not only to the end users but city in general as the infra burden would then be reduced drastically as well

.

amit3011 · 01-03-10

How can we get more clarity on this issue?

realacres · 01-03-10

Here are the exact details:-

The service Tax (ST) is applicable on all under-cons projects,
10.3% will be charged on 33% of total amount or in simple words, you pay 3.3% on total cost of the flat. Hence, for every INR 1L/-, you pay INR 3300/- more,
If you have already booked a flat/row house; and the payment till date is say 60% done, then the ST will be applicable only on the balance 40% of the amount; hence the ST will not be retrospective which is good for those who have already made considerable payment till date,
However, if you have just done the agreement with entire payment left, it will be as good as paying 3.3% on total amount,
No ST for flats which have completion certificate*.
The ST is not applicable on purchase of land,
The ST will come into effect once the president signs the bill. In anycase, it will be applicable not before 1st Apr 2010.

* Completion Certifcate is different from ready poss. Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%. Hence, projects involving multiple phases should be avoided in general

. Hope this issue is clear. If not, let us know.

razer · 01-03-10

Quote:

Originally Posted by realacres

Here are the exact details:-

The service Tax (ST) is applicable on all under-cons projects,
10.3% will be charged on 33% of total amount or in simple words, you pay 3.3% on total cost of the flat. Hence, for every INR 1L/-, you pay INR 3300/- more,
If you have already booked a flat/row house; and the payment till date is say 60% done, then the ST will be applicable only on the balance 40% of the amount; hence the ST will not be retrospective which is good for those who have already made considerable payment till date,
However, if you have just done the agreement with entire payment left, it will be as good as paying 3.3% on total amount,
No ST for flats which have completion certificate*.
The ST is not applicable on purchase of land,
The ST will come into effect once the president signs the bill. In anycase, it will be applicable not before 1st Apr 2010.

* Completion Certifcate is different from ready poss. Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%. Hence, projects involving multiple phases should be avoided in general

. Hope this issue is clear. If not, let us know.

Real, thank you very much for this!

I'm in a situation where my agreement was signed off last year, and 100% payment was made during agreement. I'm not sure what/how much is applicable to me, but this surely does help.

nitisood35 · 02-03-10

Hi Real

As i see it, it is like penalizing customer in a way for buying in under-construction project.
What if a builder was suposed to complete his project by Mar 2010 and because of delays, he is finishing (or plans to) the project by May 2010. Now in such a case though a customer is ready to pay the amount, he/she can't and unnecessary has to pay the service tax (on the pending amount) as per the new rules. This isn't fair... It should be the builder who should be penalized and he should be the one to pay compensation to the buyer and service tax to govt on the delayed payment.

Is this the right thing ?

It will actually mean people paying more money to builder in March to save themselves from paying 3.3% tax on the remaining amount.
What is govt gaining by imposing this tax? or is it some kind of govt incentive to builder community?

Quote:

Originally Posted by realacres

Here are the exact details:-

The service Tax (ST) is applicable on all under-cons projects,
10.3% will be charged on 33% of total amount or in simple words, you pay 3.3% on total cost of the flat. Hence, for every INR 1L/-, you pay INR 3300/- more,
If you have already booked a flat/row house; and the payment till date is say 60% done, then the ST will be applicable only on the balance 40% of the amount; hence the ST will not be retrospective which is good for those who have already made considerable payment till date,
However, if you have just done the agreement with entire payment left, it will be as good as paying 3.3% on total amount,
No ST for flats which have completion certificate*.
The ST is not applicable on purchase of land,
The ST will come into effect once the president signs the bill. In anycase, it will be applicable not before 1st Apr 2010.

* Completion Certifcate is different from ready poss. Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%. Hence, projects involving multiple phases should be avoided in general

. Hope this issue is clear. If not, let us know.

kothrud_pune · 02-03-10

Quote:

Originally Posted by realacres

Here are the exact details:-

The service Tax (ST) is applicable on all under-cons projects,
10.3% will be charged on 33% of total amount or in simple words, you pay 3.3% on total cost of the flat. Hence, for every INR 1L/-, you pay INR 3300/- more,
If you have already booked a flat/row house; and the payment till date is say 60% done, then the ST will be applicable only on the balance 40% of the amount; hence the ST will not be retrospective which is good for those who have already made considerable payment till date,
However, if you have just done the agreement with entire payment left, it will be as good as paying 3.3% on total amount,
No ST for flats which have completion certificate*.
The ST is not applicable on purchase of land,
The ST will come into effect once the president signs the bill. In anycase, it will be applicable not before 1st Apr 2010.

* Completion Certifcate is different from ready poss. Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%. Hence, projects involving multiple phases should be avoided in general

. Hope this issue is clear. If not, let us know.

There r few things like MSEB,Society maitenance. Is the ST is applicable for this also?
Also I heard ST not applicable for Parking.Don't know what this is?

lazybone007 · 02-03-10

"Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%."

If it is ready possession, then on what amount will service tax be paid? I thought it is only for under construction projects.

27-02-10	#13
sanav3 Member Join Date: Jul 2008 Posts: 143 Thanks: 1 Thanked 0 Times in 0 Posts Rep Power: 1	in the short run this would boast resale market ... With Budget 2010, tax slabs increased, will be increased even further next year with DTC, tax deductions because of Home loan might be rolled back...So the advantage of buying a house for saving tax are reducing Looks like the incentives for buying a flat are going away gradually. Good for genuine buyers who actually need a flat for consumption as demand shall decrease and rates should reduce Last edited by sanav3; 27-02-10 at 12:31 PM.

01-03-10	#16
realacres Veteran Member Join Date: Jun 2009 Posts: 5,686 My Mood: Thanks: 15 Thanked 48 Times in 35 Posts Rep Power: 1	ST Details Here are the exact details:- The service Tax (ST) is applicable on all under-cons projects, 10.3% will be charged on 33% of total amount or in simple words, you pay 3.3% on total cost of the flat. Hence, for every INR 1L/-, you pay INR 3300/- more, If you have already booked a flat/row house; and the payment till date is say 60% done, then the ST will be applicable only on the balance 40% of the amount; hence the ST will not be retrospective which is good for those who have already made considerable payment till date, However, if you have just done the agreement with entire payment left, it will be as good as paying 3.3% on total amount, No ST for flats which have completion certificate. The ST is not applicable on purchase of land, The ST will come into effect once the president signs the bill. In anycase, it will be applicable not before 1st Apr 2010. Completion Certifcate is different from ready poss. Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%. Hence, projects involving multiple phases should be avoided in general. Hope this issue is clear. If not, let us know.

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27-02-10	#12
Venkytalks Veteran Member Join Date: Sep 2009 Posts: 2,578 Thanks: 21 Thanked 133 Times in 62 Posts Rep Power: 1	It may not be applicable for all flats, there is no clarity. More info here: http://www.indianrealestateforum.com/noida/t-budget-2010-10201.html[/url]

01-03-10	#15
amit3011 Member Join Date: Aug 2009 Posts: 205 My Mood: Thanks: 1 Thanked 1 Time in 1 Post Rep Power: 1	How can we get more clarity on this issue?

02-03-10	#20
lazybone007 Member Join Date: Oct 2009 Posts: 424 Thanks: 1 Thanked 4 Times in 3 Posts Rep Power: 1	"Hence, if you buy ready poss which doesn't have completion certificate, you still would be charged 3.3%." If it is ready possession, then on what amount will service tax be paid? I thought it is only for under construction projects.