Elite Members,

I have booked a flat in Shriram Sankari, Perumathanallu project. Below is the cost sheet break up:
Saleable area = 1240 sq.ft
Flat cost (land cost + construction cost+ car parking) - 29.5 Lakhs
EB+Water+Sewage charges - 1.3 Lakhs
Piped Gas line + Solar water heater - 0.35 lakhs
Service tax - 1.3 Lakhs
VAT - 2.6 lakhs
Others (Development charges +Corpus+ Maintenance +Maintenance Service Tax) - around 1 lakh
Total flat cost including registration - 36.5 lakhs

To me, this appears to be an inflated total cost over the actual flat cost, esp. the service tax and VAT.

When asked about the details of ST and VAT, below is the developer's response:

"Service tax is calculated on Construction cost , EB , Piped gas charges 4.944%.
VAT is calculated on Construction cost , EB , Piped gas charges on the 70% of the cost, i.e @14.5% of the above cost."

What I read in this forum and other places is that the service tax for under construction flat would be charged as 10.3% on 25% of the construction cost, which should be 2.575% as against 4.944% charged by the developer. Am I right here? Also the developer is charging ST for EB, which i don't think is right.

Similarly I have read VAT should be charged 5% or 14.5% on 70% of the cost, depending on the case. I don't understand what qualifies for 5% and what for 14.5%. Can some one educate me on this?

But the developer is charging 14.5% flat on 70% of Construction cost , EB , Piped gas charges, which I don't think is right. Am I right here too?

Also the EB, Water, Sewage charges put together is 1.3 lakhs. These charges also appear high.

Does the respected forum members also feel the charges collected by the developer are exorbitant as I feel or is it as per norm? Could the members provide their valuable insight into this?

Regards,
Nanda
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  • Service tax is 12.30% on 33 % of the value,which is roughly 4.08%
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  • Thanks Radnats for your response and input.

    I remember reading that ST consideration value has been brought down from 33% to 25%. Is that not so?

    How does the VAT get calculated in Tamilnadu (chennai, if it makes any difference)?

    Regards,
    Nanda
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  • In this forum itself, there was a separate thread for service ax and I give below he relevant portion:
    "I would like to confirm with you all that is there an increase in service tax for property under construction from 3.09% to 4.944% starting July 1, 2012?

    My builder told me that there is increase effective July 1, 2012 because of reduction in abatement from 75% to 60%."
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  • VAT is charged at 5% under ( 1. composite method ) and 14.5% on 70% of the value under ( 2. non-composite method ). Builder is eligible to claim input tax credit only for the items purchased in Tamilnadu and for interstate and Imported purchases, he is not entitled under method 2 . Whereas in method 1 he is not eligible to claim input tax credit for inward materials and should not claim VAT from customers at all and pay 5% from his pocket . Hence many builders avoid method 1 smartly and opt for method 2 to pass the burden to customers

    ST is charged at 12.36 on 40% of the value under Works Contracts at 4.944% since various types subcontractors are engaged in construction .

    There are 67:33,75:25 and 60:40 methods for various sub contracts covered under works contract Act but building construction involve various electrical,civil,plumbing,design,Architectures,inflow of materials from various regions at various Taxes, builders are forced to adopt the methods which are acceptable to Local Tamilnadu Govt for VAT in one side and CE dept of Central Govt for ST on the other side as per the norms.

    To be precise , for TN VAT assessment, they declare 70:30 basis for materials and services cost and for ST, 60:40 for materials and services

    As builders have to maintain books of account and Payables/ Receivables to Vendors matching with Receipts from Customers with their profit Margin, they can not collect excess Tax payment which will attract 18% penalty nor lower Tax payment to end up in paying from their pocket and suppression of facts .


    EB,WATER,SEWERAGE charges of 1.3 lacs are normal and at par with other Builders Purva Windermere( they charge 1.24 lacs for 2 BHK Flat)

    Originally Posted by nanda.ire
    Elite Members,

    I have booked a flat in Shriram Sankari, Perumathanallu project. Below is the cost sheet break up:
    Saleable area = 1240 sq.ft
    Flat cost (land cost + construction cost+ car parking) - 29.5 Lakhs
    EB+Water+Sewage charges - 1.3 Lakhs
    Piped Gas line + Solar water heater - 0.35 lakhs
    Service tax - 1.3 Lakhs
    VAT - 2.6 lakhs
    Others (Development charges +Corpus+ Maintenance +Maintenance Service Tax) - around 1 lakh
    Total flat cost including registration - 36.5 lakhs

    To me, this appears to be an inflated total cost over the actual flat cost, esp. the service tax and VAT.

    When asked about the details of ST and VAT, below is the developer's response:

    "Service tax is calculated on Construction cost , EB , Piped gas charges 4.944%.
    VAT is calculated on Construction cost , EB , Piped gas charges on the 70% of the cost, i.e @14.5% of the above cost."

    What I read in this forum and other places is that the service tax for under construction flat would be charged as 10.3% on 25% of the construction cost, which should be 2.575% as against 4.944% charged by the developer. Am I right here? Also the developer is charging ST for EB, which i don't think is right.

    Similarly I have read VAT should be charged 5% or 14.5% on 70% of the cost, depending on the case. I don't understand what qualifies for 5% and what for 14.5%. Can some one educate me on this?

    But the developer is charging 14.5% flat on 70% of Construction cost , EB , Piped gas charges, which I don't think is right. Am I right here too?

    Also the EB, Water, Sewage charges put together is 1.3 lakhs. These charges also appear high.

    Does the respected forum members also feel the charges collected by the developer are exorbitant as I feel or is it as per norm? Could the members provide their valuable insight into this?

    Regards,
    Nanda
    CommentQuote
  • Thanks a lot RaviCbe for the detailed reply.

    Is the builder expected to pass on CENVAT credit (again from my readings) to his customers?

    Regards,
    Nanda
    CommentQuote
  • As we ( Customers of builders ) are not registered with CE ,we are not entitled for CENVAT credit or any set off for that matter. But if we are registered dealer and reselling goods ,we can .

    House is taxed ( though should not be as it is immovable??!!! ) only once when it is under construction and once it is over and CC is received, not taxable by VAT and ST. Hence for resale,it is not surfacing again.

    Originally Posted by nanda.ire
    Thanks a lot RaviCbe for the detailed reply.

    Is the builder expected to pass on CENVAT credit (again from my readings) to his customers?

    Regards,
    Nanda
    CommentQuote
  • Hmmmm... Can you share details on when the project is expected to complete?
    And how are the occupancy details, I mean, are people really going to start moving in there immediately or is it going to take a while for the township to get completely activated?
    Are there any commercial outlets as part of this venture?
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  • Thanks again RaviCbe. That brings in clarity.

    Regards,
    Nanda
    CommentQuote
  • sh1729,

    Reg Phase-1, I got a mail from Shriram that they are ready to handover couple of towers of Phase-1. Not sure about Phase-2.

    "Are people going to move in immediately" - no idea on that. My gut feeling is, it would take time.

    The project includes shopping area, though not sure when would it come up.

    Regards,
    Nanda
    CommentQuote
  • I also received a mail from Shiram on ready to occupy. I visited the site last Saturday, looks like few are staying....at least 35 houses did house warming ceremony....I could see few flats with furniture etc........ I made the final payment after they confirmed, When I asked for the final payment clearance letter, they are asking for excess VAT (they are yet to confirm the amount) ....is it the same for everyone? Before I made the final payment I checked with them (over the phone and email) , they confirmed (email) it is final payment..now...they are asking for extra VAT ...totally irritating....this will be the case for everyone I suppose....I somehow want to come out with them. They charged 40,000/- for fitted gas and solar water heater
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  • Hi Sanil John and Nandaire,

    I have booked a flat in Shriram shankari in phase 2. I am not clear how the UDS is arrived at. Whether commercial establishments are included in the UDS calculation or not? If they are included, then shouldnt the residents be the owner of those places?

    I have posted detailed queries in the last few posts in the following thread. could you please share your experiene..

    https://www.indianrealestateforum.com/forum/city-forums/chennai-real-estate/11171-shriram-shankari-shriram-group-guduvancherry-chennai/page4?t=13487&page=4
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  • Anyone invested in Shriram Shankari ? Kindly share your exprience if you have moved in there .
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