Hi, i am planning to buy a builder floor. Builder has bought plots in reputed gated society and constructed floors over it. Now while i am discussing the final cost etc, he is charging service tax 3.09% over the registry amount. Just wanted to be sure, in this case, does service tax applicable or not, as someone told me that if builder has got OC from the its seller as it is a resale case, then no service tax is applicable. Kindly confirm. Thanks
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  • Originally Posted by abhishekg198
    Hi, i am planning to buy a builder floor. Builder has bought plots in reputed gated society and constructed floors over it. Now while i am discussing the final cost etc, he is charging service tax 3.09% over the registry amount. Just wanted to be sure, in this case, does service tax applicable or not, as someone told me that if builder has got OC from the its seller as it is a resale case, then no service tax is applicable. Kindly confirm. Thanks


    I sold my floor in Sushant Lok 3 in month of October last year but haven't charged any service tax from buyer.

    Even my CA hasn't asked me about it while filing return.
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  • Builder charge the same and not the individuals so he is right
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  • Originally Posted by ADIT11983
    Builder charge the same and not the individuals so he is right



    -service tax is to charge a tax on the services of a builder,
    -they have determined that a certain portion is for materials and land and has to be not charged service tax
    -rest of the cost is service of builder in constructing it,
    -therefore the service tax is a ratio of the full value and not on the full value, there fore the service tax on property is lower than other services.

    builder has to charge once built and in resale nope the reseller has not provided any service
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  • Service tax is applicable on under construction property and not on resale. If an under construction property is being resold than the service tax should be applicable on the amount that is due from the new purchaser. There should be no service tax on the amount that the 1st purchaser has paid to builder.
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  • I think, i am a bit confused now....in my case, builder is currently constructing the floors on his own land which he purchased from someone. Now, i am the 1st buyer for that floor which is under construction by the builder for which registry will happen in 1-2 months. Therefore, will this property will be treated as resale or under construction...as only final finishing, paint etc is only pending....he is asking for 3.09% service tax on the registry amount and he will provide receipt for the same. Kindly confirm
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  • Originally Posted by abhishekg198
    I think, i am a bit confused now....in my case, builder is currently constructing the floors on his own land which he purchased from someone. Now, i am the 1st buyer for that floor which is under construction by the builder for which registry will happen in 1-2 months. Therefore, will this property will be treated as resale or under construction...as only final finishing, paint etc is only pending....he is asking for 3.09% service tax on the registry amount and he will provide receipt for the same. Kindly confirm



    he was the buyer of the land not of structure. you are the first buyer of the structure so you have to pay the service tax, I have tried to explain the concept of service tax in the earlier post.
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  • Originally Posted by who me
    -service tax is to charge a tax on the services of a builder,
    -they have determined that a certain portion is for materials and land and has to be not charged service tax
    -rest of the cost is service of builder in constructing it,
    -therefore the service tax is a ratio of the full value and not on the full value, there fore the service tax on property is lower than other services.

    builder has to charge once built and in resale nope the reseller has not provided any service

    DLF is not charging ST on NTH inventory available with them, because they have OC for the same hence it can't be treated as under construction .
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  • Originally Posted by Domum
    DLF is not charging ST on NTH inventory available with them, because they have OC for the same hence it can't be treated as under construction .



    they are correct on that, once OC is received they have an inventory of finished goods that they are selling at this point they are not providing any SERVICES for construction and no service tax is due
    who ever said tax laws are simple, I remember when I was a child and there was a octroi (chungi) tax on bringing gurh ki bheli in to delhi but no octoroi for broken chunks of gurh so one day outside new delhi station I saw an argument between octroi tax man and a passenger, disgusted the passenger broke the gurh bheli in half and then the guy was told now he can go w/o tax, similarly when Charan Singh was CM UP he put a ban on export of atta to curb wheat shortage he made out going octroi on atta especialy in points in Delhi ( he just was being a pain in Indira's side) so dhaba walas started to get dough ( gundha atta or rotiyan itself from Gaziabad.
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  • Originally Posted by abhishekg198
    I think, i am a bit confused now....in my case, builder is currently constructing the floors on his own land which he purchased from someone. Now, i am the 1st buyer for that floor which is under construction by the builder for which registry will happen in 1-2 months. Therefore, will this property will be treated as resale or under construction...as only final finishing, paint etc is only pending....he is asking for 3.09% service tax on the registry amount and he will provide receipt for the same. Kindly confirm


    You have to pay ST @3.09%. Also, donot forget to deduct 1% TDS on invoiced amount and deposit the same in govt if cost of the property is above 50 lakh. Details at link below:
    https://www.tin-nsdl.com/TDS/TDS-FAQ.php
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  • Originally Posted by Domum
    DLF is not charging ST on NTH inventory available with them, because they have OC for the same hence it can't be treated as under construction .


    Sir the same will be a part of cost as the same will have been deposited with the government...kindly recheck
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  • Originally Posted by ADIT11983
    Sir the same will be a part of cost as the same will have been deposited with the government...kindly recheck



    yes there is no ST on already built property (structure) as ST is the tax on services provided by builder, once a completed building is sold no ST. having said that remember there is no free lunch, in such case builder has paid St and just adjusted his prices accordingly, very similar to some one booking an under construction property, waiting for completion and then selling in resale, who pays T, original booking person does not just absorb the ST but raises the price to recover all costs.
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  • Yes exactly the same ...................no one will pay out of his pocket it is inbuilt in the prices of the property...
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