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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  • ST/VAT

    Originally Posted by Jitu_Sir

    If all payment done prior April 2010 then NO VAT and prior to July 2010 then NO ST.



    Jitu,

    Can you shed some light on the scenario when part payment is done before April/July 2010 and the remaining after that? What component is the ST/VAT applicable on, only on the remaining part? Also, has the high court given a decision on ST/VAT yet?
    CommentQuote
  • jitu_sir +1...Thanks for all the valuable information!!!You have always provided legal info which i have noticed in the various thread..
    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.

    Actually,I was confused in using those words,since it was long time back!!Now ,that you mentioned Index-2..That is precisely what i wanted to say!!Yes,the Index-2 form is still with the builder and he mentions that he will need it for getting NOC and all!!..He says that the Sq.foot allotment of the parking lot is mentioned in that index-2..Could you please confirm my doubt?

    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.

    -->does this mean that the builder will carry out all the proposed features which he had mentioned in the brochure previously??I mean garden,clubhouse..etc?


    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.


    -->I just needed to know from which date will the property tax levied?I mean I got the Index 2 last year august!!So ,will it be from that month? or will it be from march 2011- march 2012? how do they evaluate the period?



    Thanks in advance!!
    CommentQuote
  • Originally Posted by gsa177
    Jitu,

    Can you shed some light on the scenario when part payment is done before April/July 2010 and the remaining after that? What component is the ST/VAT applicable on, only on the remaining part?

    Dear gsa177,
    VAT is applicable only in case your document is registered after April 2010. ST is applicable on all payments made after July 2010.
    Originally Posted by gsa177
    Also, has the high court given a decision on ST/VAT yet?

    Case admitted. No decision yet.
    CommentQuote
  • Originally Posted by krawoorkar
    jitu_sir +1...Thanks for all the valuable information!!!You have always provided legal info which i have noticed in the various thread..

    Dear krawoorkar,
    My pleasure to share my limited knowledge on RE.
    Originally Posted by krawoorkar

    Actually,I was confused in using those words,since it was long time back!!Now ,that you mentioned Index-2..That is precisely what i wanted to say!!Yes,the Index-2 form is still with the builder and he mentions that he will need it for getting NOC and all!!..He says that the Sq.foot allotment of the parking lot is mentioned in that index-2..Could you please confirm my doubt?

    Builder should hand over the original registered 'Agreement to Sale' copy along with Index II to the Flat Purchaser. Since parking cannot be sold it is not mentioned in Index II. Builder can only make allotment of the same.
    Originally Posted by krawoorkar

    -->does this mean that the builder will carry out all the proposed features which he had mentioned in the brochure previously??I mean garden,clubhouse..etc?

    Some builders do garden, clubhouse after they complete all buildings while some construct them at first from marketing point of view. Clubhouse too needs sanction from PMC since it has RCC structure.
    Originally Posted by krawoorkar

    -->I just needed to know from which date will the property tax levied?I mean I got the Index 2 last year august!!So ,will it be from that month? or will it be from march 2011- march 2012? how do they evaluate the period?




    Thanks in advance!!




    Property is taxed when the builder sends the list to PMC office 'shetriya karyalay' after he receives the OC. As per my knowledge you will be taxed from March 2011. Will confirm on this point in 2/3 days.
    CommentQuote
  • Originally Posted by Jitu_Sir
    Dear gsa177,
    VAT is applicable only in case your document is registered after April 2010. ST is applicable on all payments made after July 2010.

    Case admitted. No decision yet.


    Thanks Jitu. Your efforts in trying to resolve general queries, not directly related to Samrajya/your projects, are much appreciated. You are definitely earning some good will!
    CommentQuote
  • Re:Query about Service tax and VAT Reply to Thread

    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 October 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


    According to the IT Law Service Tax is not applicable to the construction before 1st July 2010.
    In your case you will have to pay Service Tax and VAT.
    CommentQuote
  • Originally Posted by Jitu_Sir
    Dear krawoorkar,
    My pleasure to share my limited knowledge on RE.


    Jitu_sir :Huge respect for your replies..I was busy since last few days ,so missed out ..
    1)Jitu_sir::Builder should hand over the original registered 'Agreement to Sale' copy along with Index II to the Flat Purchaser. Since parking cannot be sold it is not mentioned in Index II. Builder can only make allotment of the same.


    -->>Builder did hand over the Original registered 'Agreement to sale' copy which is the one i think is done at sub-registrar's office by paying stamp duty ,registration fees and fees to lawyer,et all..This copy was handed to us when we did registration in jan2010..Now,at that time the builder had not yet allocated parking to customers of entire project ,so he dint give any index-II. Now ,that the copy rests with the bank..I presume that the builder will hand over only Index II once he applies for CC from corporation..I am not sure about one original document that builder keeps with himself for filing CC from the buyers,It might be index II or OC ,whatever, you can just highlight ..


    Further more,Going ahead,what all doc's should i collect from Builder..Since i don wanna go many times asking for a particular doc..Jitu_sir,I would appreciate if you can list down the whole procedure of obtaining all legal docs from builders right from purchase to transfer of rights..
    Like..1)Agreement to sale..2)Index II..and so on..Please also include the docs pertaining to MSEB connection and Property tax..(if any)..

    2)Jitu_sir::Some builders do garden, clubhouse after they complete all buildings while some construct them at first from marketing point of view. Clubhouse too needs sanction from PMC since it has RCC structure.

    --->>I dunno since buyers wanted to get their flats on top priority ,he has delayed the construction of Garden and club house..Is there any clause that if builder does'nt complete as per promised amenities, We can fight back?


    3)Jitu_sir::Property is taxed when the builder sends the list to PMC office 'shetriya karyalay' after he receives the OC. As per my knowledge you will be taxed from March 2011. Will confirm on this point in 2/3 days.

    -->>Appreciate Your views regarding this issue..
    CommentQuote
  • Jitu Sir,

    i purchase a flat in pune in June 2009. Due to the news going around on the new tax to be applicable on under construction property i did the registration in March 2010. the builder has already charged me service tax 2.5% (approx) on all the payment done after july 2010 which i paid. the builder is giving the posession now this month and is asking me to pay for the VAT (5% of the agreement value) this is a shock for me. tow of my cousins who have purchased flat in the same project and who did their registration in nov 2009 are also asked to pay for this tax. one of my other cousin who bought a flat in adjoining project did the registration last month and same time took the posession paid only 1% VAT (on agreement value) and 2.5% service tax for payments done after July 2010.

    i understand i hv to pay additional VAT simple because i did the registration in a hurry (prior to april 2010) to avoid that 1% tax.

    appreciate your valuable comments.

    rgrds
    CommentQuote
  • Jitu Sir,

    i purchase a flat in pune in June 2009. Due to the news going around on the new tax to be applicable on under construction property i did the registration in March 2010. the builder has already charged me service tax 2.5% (approx) on all the payment done after july 2010 which i paid. the builder is giving the posession now this month and is asking me to pay for the VAT (5% of the agreement value) this is a shock for me. tow of my cousins who have purchased flat in the same project and who did their registration in nov 2009 are also asked to pay for this tax. one of my other cousin who bought a flat in adjoining project did the registration last month and same time took the posession paid only 1% VAT (on agreement value) and 2.5% service tax for payments done after July 2010.

    i understand i hv to pay additional VAT simple because i did the registration in a hurry (prior to april 2010) to avoid that 1% tax.

    appreciate your valuable comments.

    rgrds

    Dear navedrehman,
    In your case since your registration is prior to 31st March 2010, you do no require to pay 1% VAT. In such cases we had taken indemnity bond from previous purchasers.
    As per the latest update, Hon'l HC has dismissed the writ petition challenging the VAT amount. As per my knowledge Credai is planning to challenge the order in Supreme Court.
    Till the outcome of SC, you can request the builder to execute a Indemnity bond. That should suffice for now.
    CommentQuote
  • Originally Posted by Jitu_Sir
    Dear navedrehman,
    In your case since your registration is prior to 31st March 2010, you do no require to pay 1% VAT. In such cases we had taken indemnity bond from previous purchasers.
    As per the latest update, Hon'l HC has dismissed the writ petition challenging the VAT amount. As per my knowledge Credai is planning to challenge the order in Supreme Court.
    Till the outcome of SC, you can request the builder to execute a Indemnity bond. That should suffice for now.

    thank you Jitu sir for your response.

    however, here the builder is not talking about 1% instead he is insisting on 5% (of the agreement value) mentioning that there was some case pending since 2006. my confusion is whether the VAT is 1% or 5%.

    he has already charged me around 2.5% on all payments done after June 2010.

    rgrds
    CommentQuote

  • thank you Jitu sir for your response.

    however, here the builder is not talking about 1% instead he is insisting on 5% (of the agreement value) mentioning that there was some case pending since 2006. my confusion is whether the VAT is 1% or 5%.

    he has already charged me around 2.5% on all payments done after June 2010.

    rgrds

    Dear navedrehman,
    The VAT before 31st March 2010 was presumed to be 5%. But there was ambiguity about its calculation. There were 2/3 different theories.
    About 2.5% charged to you was Service Tax.
    CommentQuote
  • jitu sir,

    does this mean that if i wud have done the registration for my flat in or after april 2010 then i would have paid only 1% as VAT. but as i did the registration before april 2010 and as still there is confusion on the VAT rate prior to april 2010 hence the builder wants to play safe and wants me to pay 5% ?

    are u aware of any latest hearing or verdict from the court on this. 5% is a huge amount (in addition to the service tax which i hv been paying)
    CommentQuote
  • jitu sir,

    does this mean that if i wud have done the registration for my flat in or after april 2010 then i would have paid only 1% as VAT. but as i did the registration before april 2010 and as still there is confusion on the VAT rate prior to april 2010 hence the builder wants to play safe and wants me to pay 5% ?

    are u aware of any latest hearing or verdict from the court on this. 5% is a huge amount (in addition to the service tax which i hv been paying)

    Dear navedrehman,
    Yes. Your understanding is right.
    I will get the details about the latest update on this VAT issue and will let you know.
    CommentQuote
  • Thank you Jitu sir for all the information. appreciate if you could let me know the new updates (as i understand that the court has given some judgement in the last week of may).

    thanks once again.
    CommentQuote
  • Jithu Sir,

    I purchased a flat on June 2009 and the promoter handed it over by Sep 2009 saying that we need to pay ST if Govt. asks for it. Now in June 2012 he has sent a notice saying that Govt. is asking for it. What should I do?Is ST applicable after such a long time?
    CommentQuote