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Service Tax In Noida
March 8 2011 , 09:47 AM   #11
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U r right on the Lodha case & the Supreme Court ruling .

The open parking being free does not really mean anything much for the buyers, for the simple reason that builders could easily include that cost in the initial BSP .

My PoV, please comment . I would like to understand this better .


Quote:
Originally Posted by ondabhai
There was some ruling from supreme court that builder can not charge for open car park. Lodha having trouble in Mumbai on this ground.

So open car park is out as you are not paying anything for it.

Quite surprising that there are so many people here buying under construction apartments and no one had confusion or doubt on this aspect
March 8 2011 , 10:30 AM   #12
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Quote:
Originally Posted by MANOJa
U r right on the Lodha case & the Supreme Court ruling .

The open parking being free does not really mean anything much for the buyers, for the simple reason that builders could easily include that cost in the initial BSP .

My PoV, please comment . I would like to understand this better .
Absolutely, there is nothing called free lunch... builder will factor in that cost in something else.... on an average 30%+ profit after tax in real estate business is insane!!

Need to understand the service tax clearly.. 2.757% is not a small amount.

Any kind soul want to share their experience with service tax ?
March 8 2011 , 04:54 PM   #13
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ondabhai : ManojA has already shared the details of S.tax on various components.

Answers to some questions asked:

1. What happens if there is all inclusive rate charged by the builder? How does it get split in to 3 slabs mentioned above?
--The followed "practicse" in such cases is:
a. EDC/IDC component is tax free as it's paid to Govt and is fixed
b. Rest all is put under BSP and S.tax calculated accordingly.

2. Can a retail buyer insist for proof of builder having paid to the Government?
--YES, but you will hardly get it. Anyways, it'l be easier to get the same from Govt using RTI rather than the builder.

3. What happens if a builder collects ST from end buyer and does not pay to Government?
--Then the builder is liable to face the legal consequences. Anyhow, as a buyer you are not legally responsible for the S.tax.
March 8 2011 , 04:58 PM   #14
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Quote:
Originally Posted by ondabhai
There was some ruling from supreme court that builder can not charge for open car park. Lodha having trouble in Mumbai on this ground.

So open car park is out as you are not paying anything for it.
The SC judgement said that -- Parking (Open/stilt) can't be sold as an independent entity. It can be sold alongwith an apartment and that's what builders are doing. That's why still open parkings are being sold by all the builders.
March 8 2011 , 05:27 PM   #15
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Quote:
Originally Posted by ramans
The SC judgement said that -- Parking (Open/stilt) can't be sold as an independent entity. It can be sold alongwith an apartment and that's what builders are doing. That's why still open parkings are being sold by all the builders.
Good information shared by you guys!

Now the bigger question is if builder has CHARGED any amount which is legally wrong what should we do? Will builder pays back to us?

One of my friend has paid for the open car parking in one of the project in sec 137.
March 8 2011 , 05:39 PM   #16
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Quote:
Originally Posted by piyush11
Good information shared by you guys!

Now the bigger question is if builder has CHARGED any amount which is legally wrong what should we do? Will builder pays back to us?

One of my friend has paid for the open car parking in one of the project in sec 137.
Depends..for what the money was paid and the builder. Typically money is never returned, but adjusted against future payments by builders, but you first need to prove to the builder that he has charged wrongly, which in most of the cases is not an easy job. If you can share the exact details of the wrongly charged amount, may be I can comment better.
March 9 2011 , 08:20 AM   #17
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Great discussion and I guess it clears many of our doubts. To summarise

1. Service Tax is paid at 2.575 % for each time you pay an installment against Basic Sale Price (BSP)

2. If your (above #1) installments are paid by Home Loan, you pay at 2.575 % for the installment each time your loan is disbursed to builder.

3. Some component of your payments attracts higher rate at 10.3% such as Preferential Location Charge (PLC); club membership; maintenance charge;

4. All are not so bad, there is NO Service Tax for EDC/IDC; IFMS; IBMS; Car Park (covered), Power Backup, etc

5. Not clear about open car park, it appears that builder can not legally sell open car park and hence there should not be any ST

6. Generally any wrong charge by builders are not refunded but can be adjusted for next payment after discussion.

7. IF there is no break up of cost or builder asked for a lumpsum cost then the service tax treatment is subjective... no clear guide line.

8. Builder normally give you receipt for service tax... however asking them proof that they themselves paid to government is subjective. As long as you got the receipt, you are safe.

9. If builder does not pay to Government ... it's a legal case and your receipt will be handy for you.

Thank you all, we have much cleared idea on Service Tax now.
March 9 2011 , 08:26 AM   #18
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g-h-arondabhai, thanks for summarizing the discussions, it would be of great help to many others .
March 9 2011 , 01:26 PM   #19
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Quote:
Originally Posted by ondabhai
Great discussion and I guess it clears many of our doubts. To summarise

1. Service Tax is paid at 2.575 % for each time you pay an installment against Basic Sale Price (BSP)

2. If your (above #1) installments are paid by Home Loan, you pay at 2.575 % for the installment each time your loan is disbursed to builder.

3. Some component of your payments attracts higher rate at 10.3% such as Preferential Location Charge (PLC); club membership; maintenance charge;

4. All are not so bad, there is no Service Tax for EDC/IDC; IFMS; IBMS; Car Park

5. Not clear about open car park, it appears that builder can not legally sell open car park and hence there should not be any ST

6. Generally any wrong charge by builders are not refunded but can be adjusted for next payment after discussion.

7. IF there is no break up of cost or builder asked for a lumpsum cost then the service tax treatment is subjective... no clear guide line.

8. Builder normally give you receipt for service tax... however asking them proof that they themselves paid to government is subjective. As long as you got the receipt, you are safe.

9. If builder does not pay to Government ... it's a legal case and your receipt will be handy for you.

Thank you all, we have much cleared idea on Service Tax now.
What should be the service tax in case of covered car parking?

Do external electrification charges, fire fighting charges and power back up charges come under the purview of service tax.
March 9 2011 , 01:27 PM   #20
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Quote:
Originally Posted by abhishek_singh
What should be the service tax in case of covered car parking?

Do external electrification charges, fire fighting charges and power back up charges come under the purview of service tax.
Covered car parking & Power back up are service tax free. At least Logix has not charged for it!
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