Service Tax on Under Construction Flat booking - Page 8 - Indian Real Estate Forum

razer · 06-03-10

Quote:

Originally Posted by Rupali_SG

The builder is Ekta supreme.

Is this the lake homes project in Powai?

realacres · 06-03-10

Quote:

Originally Posted by razer

What's GR?

GR means Govt. Resolution.

mahesh pune · 06-03-10

Quote:

Originally Posted by Rupali_SG

Thanks, My builder is asking for 4% VAT on the total agreement amount of the flat which is due for possession in next 2 weeks. he'll not be giving possession unless I open an Fixed deposit account in the bank in which I'll need to deposit this amount. The bank will issue a letter to builder mentioning me as owner of that FD giving some right of that FD to the builder. If the VAT is applied then this amount will be given to government or if not, the FD will be given back to me. My concern is that when government has not even mentioned about the VAT how can he ask the same from me ? My deal was thru last year and I've paid the entire 100% of the agreement amount. Can anyone please suggest if i need to involve a legal advisor to talk with the builder or I should deal the matter myself?

Builder may not have asked for VAT , It must be servic etax which was imposed by Maharashtra state goverment in 2006 is is under stay order by high court. As case is pending few builders follow this practice.

Rupali_SG · 06-03-10

Yeah. It's the lakehome project. Builder has precisely asked for 4% VAT and 3.3 % of service taxes. The major problem sounds to be the completion certificate of the building which the builder has not yet received.

Jitu_Sir · 06-03-10

Quote:

Originally Posted by razer

Jitu_Sir, is this FD the same thing as an indemnity bond as you have mentioned in the case of VAT.

Dear razer,
FD is different from I-bond. Indemnity bond is a nominal agreement which is executed at notary. It Indemnifies the builder from VAT if applicable on Sale of Flats in future. So Builder needs to collect the VAT amount (being Indirect Tax) from the Flat purchaser as and when demanded by Sales Tax Dept.

razer · 06-03-10

Quote:

Originally Posted by Jitu_Sir

Dear razer,
FD is different from I-bond. Indemnity bond is a nominal agreement which is executed at notary. It Indemnifies the builder from VAT if applicable on Sale of Flats in future. So Builder needs to collect the VAT amount (being Indirect Tax) from the Flat purchaser as and when demanded by Sales Tax Dept.

Thank you Jitu_Sir for this clarification.

How are you dealing with ST? Or does the indemnity bond cover both VAT and ST as applicable?

Jitu_Sir · 06-03-10

Quote:

Originally Posted by razer

Thank you Jitu_Sir for this clarification.

How are you dealing with ST? Or does the indemnity bond cover both VAT and ST as applicable?

Dear razer,
My pleasure to provide the necessary info.
For ST the provision is already in our agreement. But as soon as the Govt clarifies the application of ST, we would either go for another I-bond or collect payments for the same as per the relevancy.

nagarkar · 08-03-10

I have browsed thru this thread, but did not find an important piece of info. Pardon me if it's already answered here.

For those who signed the agreement and the flat is under construction - even if the builder decides to impose this 3.3% on buyer, how will he be able to do it? The agreement is done & dusted, why should the buyer worry about any additional costs to the builder? I mean - what is the legitimate way for the builder to impose this on buyer? Or will the builder ask for just plain cash & black money? If that is the case, all buyers have a protection of law & have an option of going to the court.

I think only legitimate option for builders is to increase the rates for customers who are yet to sign an agreement. Getting more money than the agreement amount is just too difficult of a thing.

Or - am I being too naive here?

amjamirs2 · 08-03-10

THe builders always put clauses in agreement that "Service Tax" if any will be paid by purchase seperatley.

So 'service tax' will have to be paid by the purchaser only.

Quote:

Originally Posted by nagarkar

I have browsed thru this thread, but did not find an important piece of info. Pardon me if it's already answered here.

For those who signed the agreement and the flat is under construction - even if the builder decides to impose this 3.3% on buyer, how will he be able to do it? The agreement is done & dusted, why should the buyer worry about any additional costs to the builder? I mean - what is the legitimate way for the builder to impose this on buyer? Or will the builder ask for just plain cash & black money? If that is the case, all buyers have a protection of law & have an option of going to the court.

I think only legitimate option for builders is to increase the rates for customers who are yet to sign an agreement. Getting more money than the agreement amount is just too difficult of a thing.

Or - am I being too naive here?

lazybone007 · 08-03-10

Quote:

Originally Posted by nagarkar

I have browsed thru this thread, but did not find an important piece of info. Pardon me if it's already answered here.

For those who signed the agreement and the flat is under construction - even if the builder decides to impose this 3.3% on buyer, how will he be able to do it? The agreement is done & dusted, why should the buyer worry about any additional costs to the builder? I mean - what is the legitimate way for the builder to impose this on buyer? Or will the builder ask for just plain cash & black money? If that is the case, all buyers have a protection of law & have an option of going to the court.

I think only legitimate option for builders is to increase the rates for customers who are yet to sign an agreement. Getting more money than the agreement amount is just too difficult of a thing.

Or - am I being too naive here?

Let me say the builders are not so naive in these matters. The agreement will have a clause which states that any service tax if applicable will be paid by the buyer. Some builders have even taken blank post dated cheques from the buyers for this. E.g. GK Builders. They were not giving possession without the cheque.

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06-03-10	#74
Rupali_SG New Member Join Date: Mar 2010 Posts: 4 Thanks: 0 Thanked 0 Times in 0 Posts	Yeah. It's the lakehome project. Builder has precisely asked for 4% VAT and 3.3 % of service taxes. The major problem sounds to be the completion certificate of the building which the builder has not yet received.

08-03-10	#78
nagarkar Member Join Date: Feb 2010 Posts: 51 Thanks: 0 Thanked 0 Times in 0 Posts	I have browsed thru this thread, but did not find an important piece of info. Pardon me if it's already answered here. For those who signed the agreement and the flat is under construction - even if the builder decides to impose this 3.3% on buyer, how will he be able to do it? The agreement is done & dusted, why should the buyer worry about any additional costs to the builder? I mean - what is the legitimate way for the builder to impose this on buyer? Or will the builder ask for just plain cash & black money? If that is the case, all buyers have a protection of law & have an option of going to the court. I think only legitimate option for builders is to increase the rates for customers who are yet to sign an agreement. Getting more money than the agreement amount is just too difficult of a thing. Or - am I being too naive here?