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
Read more
Reply
83 Replies
Sort by :Filter by :
  • 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?


    Dear vinod bijlani,
    1% VAT can be paid any time from agreement registration till possession. Its a one time tax. We collect ait at the time of registration.
    Originally Posted by abhi2509
    few builders take on every payment made to him (i guess Pathkar Projects do this way...)...few take at the time of possesion...

    Dear abhi2509,
    Its Service tax that is collected as a component with every payment. VAT is paid as a single amount.
    CommentQuote
  • Originally Posted by pawarpradip
    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.

    Dear paarpradip,
    Name on MSEB bill is not related with Ocuppancy Certificate. MSEB doesnt demand OC for generating bills. They only require IndexII, sanction plans, transformer charging note, Firm's Quotation etc. You can check your agreement, whether a copy of OC is attached with or not. If not then ST & VAT are applicable.
    Originally Posted by pawarpradip
    And at time of booking and also at time of agreement, he did not told me about service tax and VAT at all.

    This can be a point of argument since it was in news at the time of Budget in March 2010 for Service Tax while in June2010 for VAT from state govt. Moreover though it was not told to you it is usually mentioned in the agreement that tax & levies over and above and this ST & VAT are indirect taxes which builders are supposed to collect from the buyer and pay it to resp govt.
    CommentQuote
  • Originally Posted by Jitu_Sir
    Dear paarpradip,
    Name on MSEB bill is not related with Ocuppancy Certificate. MSEB doesnt demand OC for generating bills. They only require IndexII, sanction plans, transformer charging note, Firm's Quotation etc. You can check your agreement, whether a copy of OC is attached with or not. If not then ST & VAT are applicable.

    This can be a point of argument since it was in news at the time of Budget in March 2010 for Service Tax while in June2010 for VAT from state govt. Moreover though it was not told to you it is usually mentioned in the agreement that tax & levies over and above and this ST & VAT are indirect taxes which builders are supposed to collect from the buyer and pay it to resp govt.


    Hello Jitu sir,
    Thanks for your reply.

    There are two clause.
    1) The Developers agree to complete the constructions of the said Flat with in 1 month and hand over the possession of the said Flat from the date of registered agreement. Provided all the amounts due and payable by the Purchaser are paid to the Developers.
    2)

    The above referred cost is exclusive
    1) Stamp duty and registration charges required for agreement to sale and Sale deed.
    2) Any other tax levied by Govt. or Municipal Corporation after handing over the possession of the said Flat.

    There is nothing mentioned about service tax and VAT in agreement and also not told at time of agreement.


    Can you please provide your opinion.


    If possible I can send you soft copy of my agreement.
    Please provide your email ID.





    CommentQuote
  • Jitu Sir, Please let us know, have you given back Govt. recipt back to buyers on ST and VAT which you have collected?

    or, are other builders giving any govt recipt?
    CommentQuote
  • Originally Posted by AvinKumar
    Jitu Sir, Please let us know, have you given back Govt. recipt back to buyers on ST and VAT which you have collected?

    or, are other builders giving any govt recipt?

    Dear Avinkumar,
    ST & VAT are indirect taxes which builders are supposed to collect and pay it to central & state govt respectively. Hence builders are supposed to generate receipts for the said payments made by the flat purchaser. There are no govt receipts for the same as it is paid collectively through challans.
    CommentQuote
  • Dear pawarpradip,
    As mentioned under clause no 2., the cost is exclusive of any govt taxes. Hence if any taxes are applicable over and above (like ST & VAT in this case) then it shall be borne by the flat purchaser. Moreover though it was not told to you, it's applicable in your case as there was no OC at the time of agreement registration.
    The only query I have in my mind is now how the builder is going to collect the ST component since it should have been collected with every payment slab. No issues as regards VAT since it can be paid one stroke.
    CommentQuote
  • 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.


    Does it apply to resale flats too if the Occupancy Certificate is not issued yet but the temporary possession letter is issued ? How can I make sure that as a resale buyer the end builder does not ask for VAT/Service Tax from me in future when I'm buying NOT from the builder but from a seller ?
    CommentQuote
  • Originally Posted by Jitu_Sir
    Dear pawarpradip,
    As mentioned under clause no 2., the cost is exclusive of any govt taxes. Hence if any taxes are applicable over and above (like ST & VAT in this case) then it shall be borne by the flat purchaser. Moreover though it was not told to you, it's applicable in your case as there was no OC at the time of agreement registration.
    The only query I have in my mind is now how the builder is going to collect the ST component since it should have been collected with every payment slab. No issues as regards VAT since it can be paid one stroke.


    Thanks for reply sir,

    1) Same query in my mind as well that ST component should have been collected with every payment slab and I have done one time payment.
    Bank has disbursed all amount at one time and that time he not told about ST component

    2) As mentioned under clause no 2., the cost is exclusive of any govt taxes after handing over the possession of the said Flat.
    Then ST is applicable before
    handing over the possession of the said Flat. right. as it is for under construction flat.

    One thing also I want to share that agreement was done 11 OCT 2010, full payment is done (Loan disbursement) on 18 Nov 2000 and from 10 December 2010 I am living in that flat.
    Now Builder is demanding Service tax and VAT and telling that he will not do Sale deed of that
    flat unless I paid ST and VAT

    CommentQuote
  • Originally Posted by simantadatta
    Does it apply to resale flats too if the Occupancy Certificate is not issued yet but the temporary possession letter is issued ? How can I make sure that as a resale buyer the end builder does not ask for VAT/Service Tax from me in future when I'm buying NOT from the builder but from a seller ?

    Dear simantadatta,
    VAT & ST is applicable only for underconstruction flats purchased from builders and is not applicable for resale flats since the reseller has no VAT/ST number.
    CommentQuote
  • Originally Posted by pawarpradip
    Thanks for reply sir,

    1) Same query in my mind as well that ST component should have been collected with every payment slab and I have done one time payment.
    Bank has disbursed all amount at one time and that time he not told about ST component

    Dear pawarpradip,
    1. May be the builder will issue you a fresh receipt showing ST component in it. If not, then you must change your receipt which should reflect the ST component.
    Originally Posted by pawarpradip

    2) As mentioned under clause no 2., the cost is exclusive of any govt taxes after handing over the possession of the said Flat.
    Then ST is applicable before handing over the possession of the said Flat. right. as it is for under construction flat.

    Legally possession of the flat happens only after the builder recives OC and gives you Possession letter.
    CommentQuote
  • Originally Posted by Jitu_Sir
    Dear pawarpradip,
    1. May be the builder will issue you a fresh receipt showing ST component in it. If not, then you must change your receipt which should reflect the ST component.

    Legally possession of the flat happens only after the builder recives OC and gives you Possession letter.



    I am living in the flat from last 6 months and he already gave possession letter to me and now he is saying you have to pay ST and VAT then only he will do sale deed
    CommentQuote
  • Service Tax & VAT

    Freinds..Read your posts, thanks for the information. Here is what I understood and subsequently my questions - if some one can help resolve.

    A. VAT is 1% on the Agreement Value - and HAS to be paid regardless of whatever the deal is (Buying from Builder , Buying from Reseller etc.)

    B. Service Tax is 2.58%(not sure of exact figure) of Agreement value. And has to be paid when buying from builder -- IF the Completion Certificate - alias- Bhogwata - alias - Occupancy Certificate is not ready from Builder side. If any of these are ready, then Service Tax is not applicable.

    Questions:-
    #1 In my situation I am told by the builder that I dont need to worry about the Service Tax -- as no one else who bought from him had to pay it and that it is included in the agreement value of the flat (which I think it is actually not). I checked with Builder about the Completion Ceriticate , and he says its not yet ready. (FYI pls - The building is actually complete - 10% residents are staying already, but Builder is not having the completion ceriticate. He says he will get it after a while).

    #2 My plan therefore is to to include a clause in the contract itself to have the Builder agree that he will be responsible for Service Tax if any. Would that work? Are there any other suggestions please?

    #3 Whose responsibility is it to pay Service Tax ? Builder or Buyer like us?
    CommentQuote
  • Another question - if some amount for the property has been paid before the ST provision came in place(March 2010?), is the ST only applicable on the remaining payables? What about VAT in this case?
    CommentQuote
  • HI, I went through the threads and I appreciate the fact that Mr.Jitu Sir is sharing valuable information..Sir,I have a question for you..I would like to know Details about ST and VAT In regard to the flats purchased before May 2010.
    1)If registration and stamp duty is done in jan 2010.Later on disbursements and all take place according to the Demand Letter of the Builder .Finally ,The possession letter is handed over to Us and as usual the respective flat is handed to owner .
    2)Till this point,there was no ST/VAT which needed to be given by us.
    3)Then there is form -2 which the builder keeps the original copy with himself saying that it will be required for Society formation and all.
    4)Now ,the question is ..Whether i need to pay anything more on this ?
    5)Also ,the builder says that the mentioning of the parking lot allotment will come in form 2.I need inputs for the same.
    6)Could you throw a glimpse of further procedure ,ie, OC ,Form2 ,soc formation,transfer of rights ,et al according to legal formalities.
    7) And when will be taxed for property tax et al?I have got my MSEB connection..

    Thanks
    CommentQuote
  • Originally Posted by krawoorkar
    HI, I went through the threads and I appreciate the fact that Mr.Jitu Sir is sharing valuable information..Sir,I have a question for you..I would like to know Details about ST and VAT In regard to the flats purchased before May 2010.

    Dear krawoorkar,
    Regrets for late reply. Thanks for your appreciation.
    Originally Posted by krawoorkar

    1)If registration and stamp duty is done in jan 2010.Later on disbursements and all take place according to the Demand Letter of the Builder .Finally ,The possession letter is handed over to Us and as usual the respective flat is handed to owner .

    Ok.
    Originally Posted by krawoorkar

    2)Till this point,there was no ST/VAT which needed to be given by us.

    Vat was applicable from April 2010 & ST was from July 2010.
    Originally Posted by krawoorkar

    3)Then there is form -2 which the builder keeps the original copy with himself saying that it will be required for Society formation and all.

    We are unaware of this Form-2. We do not take any such form from the purchaser.
    Originally Posted by krawoorkar

    4)Now ,the question is ..Whether i need to pay anything more on this ?

    If all payment done prior April 2010 then NO VAT and prior to July 2010 then NO ST.
    Originally Posted by krawoorkar

    5)Also ,the builder says that the mentioning of the parking lot allotment will come in form 2.I need inputs for the same.

    We provide Allotment letter on our Letter Head. Unaware of Form-2.
    Originally Posted by krawoorkar

    6)Could you throw a glimpse of further procedure ,ie, OC ,Form2 ,soc formation,transfer of rights ,et al according to legal formalities.

    The builder applies for OC with municipal corporation after subimitting all NOCs. He forms Soc when min 60% of flats are sold. Conveyance deed needs to be carried out with Soc so as to transfer ownership rights.
    Originally Posted by krawoorkar

    7) And when will be taxed for property tax et al?I have got my MSEB connection.

    Builder sends list of sold flats to Municipal Corporation after which your property is taxed. IndexII copy is sufficient, Completion is not required.
    CommentQuote