I have purchased new flat in pune.
At time of agreement, builder not gave any information about service tax and VAT.

I did Agreement on 11 Octomber 2010.
As flat was ready so Bank has disbursed all amount of loan (22 lakh) dated 18/11/2010. at one time installment (Only one payment done by bank.)

According to me Bank is done full one time disbursement of loan only if Building is having completion certificate(ready possession flats).

So Now Builder is asking about service tax and VAT amount.

Can you please tell me whether in my cases service tax and VAT is applicable or not
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  • Originally Posted by pawarpradip
    I have purchased new flat in pune.
    At time of agreement, builder not gave any information about service tax and VAT.

    I did Agreement on 11 Octomber 2010.
    As flat was ready so Bank has disbursed all amount of loan (22 lakh) dated 18/11/2010. at one time installment (Only one payment done by bank.)

    According to me Bank is done full one time disbursement of loan only if Building is having completion certificate(ready possession flats).

    So Now Builder is asking about service tax and VAT amount.

    Can you please tell me whether in my cases service tax and VAT is applicable or not

    if you have bought a flat, when the building is already having COmpletion certificate then you dont need to pay the service tax for vat i am not sure.
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  • Originally Posted by mamol
    if you have bought a flat, when the building is already having COmpletion certificate then you dont need to pay the service tax for vat i am not sure.


    Thanks for reply.

    One query. Can it happen that bank had done one time full disbursement without completion certificate
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  • Originally Posted by pawarpradip
    Thanks for reply.

    One query. Can it happen that bank had done one time full disbursement without completion certificate


    Yes, Bank always does that as CC takes time.. (say 3 buildings in project and yours is 1st bldg that got possession, but builder wants to do one CC for the whole project). Bank's disbursement hasn't got anything to do with the CC but the possession of your flat.

    I dont understand how can the builder want any money now when you have the flat in your name already and you have no liability/dues with the builder.
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  • Originally Posted by simantadatta
    Yes, Bank always does that as CC takes time.. (say 3 buildings in project and yours is 1st bldg that got possession, but builder wants to do one CC for the whole project). Bank's disbursement hasn't got anything to do with the CC but the possession of your flat.

    I dont understand how can the builder want any money now when you have the flat in your name already and you have no liability/dues with the builder.


    From first month I am paying EMI for loan not pre EMI. It means Bank is verified that flat possession and then only disbursed full amount at one time. Right?
    So can I consider that I have purchased ready possession flat.
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  • hello guys I am also buying a new under construction flat

    I want to know latest rate of service tax to be paid
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  • Originally Posted by pawarpradip
    From first month I am paying EMI for loan not pre EMI. It means Bank is verified that flat possession and then only disbursed full amount at one time. Right?
    So can I consider that I have purchased ready possession flat.


    I dont think you can assumed that Bank has verified your possession of flat on full disbursement.
    Also making full disbursement was your choice...You instruct bank to start EMI on disbursed amount...

    Anyway, you'll govt receipt for ST & VAT (for this, i am guessing)
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  • Originally Posted by hrishikeshdeo
    hello guys I am also buying a new under construction flat

    I want to know latest rate of service tax to be paid


    Service tax is 2.58% of your agreement cost.VAT 1%.
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  • Originally Posted by pawarpradip
    Thanks for reply.

    One query. Can it happen that bank had done one time full disbursement without completion certificate

    Dear pawarpradip,
    Now many banks disburse full amount based on temporary possession letter issued by the buidler meant for furniture purpose only. The bank do not insist on Possession letter which the builder can issue only when he receives Occupancy Certificate also known as 'Bhogavata' from PMC.
    In such case since the day when you executed the agreement the building was not having OC, you are liable to pay both Service tax of 2.575% and VAT of 1% of the agreement value. You should have checked this before you execute the agreement as in that case you could have prolonged the registration after OC so as to save on taxes. Moreover its essentail to attach a copy of OC with your agreement to sale/ sale deed in order to confirm that these taxes are not applicable for the said unit.
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  • Originally Posted by hrishikeshdeo
    hello guys I am also buying a new under construction flat

    I want to know latest rate of service tax to be paid

    Dear hrishikeshdeo,
    For under construction flat you need to pay Service Tax 2.575% on all payments while VAT 1% should be paid one time.
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  • thank you jitu sir :)
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  • Originally Posted by Jitu_Sir
    Dear hrishikeshdeo,
    For under construction flat you need to pay Service Tax 2.575% on all payments while VAT 1% should be paid one time.



    Jitu sir..

    Is it flat 2.575%...or Is it 10.3% of (PLC + Floor rise amount) + 2.575 of (total Consideration value - PLC - Floor rise amount)?:bab (38):

    Thanks in advance
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  • Another question - when does the VAT needs to be paid? at the time of possession or after every emi or time of booking?
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  • Originally Posted by vinod bijlani
    Another question - when does the VAT needs to be paid? at the time of possession or after every emi or time of booking?


    few builders take on every payment made to him (i guess Pathkar Projects do this way...)...few take at the time of possesion...
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  • Originally Posted by Jitu_Sir
    Dear pawarpradip,
    Now many banks disburse full amount based on temporary possession letter issued by the buidler meant for furniture purpose only. The bank do not insist on Possession letter which the builder can issue only when he receives Occupancy Certificate also known as 'Bhogavata' from PMC.
    In such case since the day when you executed the agreement the building was not having OC, you are liable to pay both Service tax of 2.575% and VAT of 1% of the agreement value. You should have checked this before you execute the agreement as in that case you could have prolonged the registration after OC so as to save on taxes. Moreover its essentail to attach a copy of OC with your agreement to sale/ sale deed in order to confirm that these taxes are not applicable for the said unit.



    Thanks for reply sir.

    One query sir, When I booked flat (September) that time, flat was in ready possession as a painting, plumbing etc all the things was done. and nothing is changed even after booking of flat.
    Even when I did agreement on 11/10/2011 and in November only I got Electricity bill which is on my name only So Is that possible that builder was still not got OC.
    And at time of booking and also at time of agreement, he did not told me about service tax and VAT at all.
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  • Originally Posted by fundoo158
    Jitu sir..

    Is it flat 2.575%...or Is it 10.3% of (PLC + Floor rise amount) + 2.575 of (total Consideration value - PLC - Floor rise amount)?:bab (38):

    Thanks in advance

    Dear fundoo158,
    Its flat 2.575% on agreement value and if builder take amount under any other different head such as Floor rise premium, MSEB, Soc, etc then 10.3% on it.
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