I have purchased a flat in May 2016 by paying a booking amount 2 weeks before OC was received. But the agreement was dated and registered after OC was obtained.
Arcitect development completion certificate and completion certificate from cheif officer along with application for OC was submitted to MCGM in oct 2015.
My question is am i liable to pay service tax and Vat . As technically no construction was done from oct 2015 as building was ready as per architect certificate.
Looking for your valuable inputs.
Asked 8 months ago in Taxation from Mumbai, Maharashtra
VAT and Service Tax are not applicable for “Constructed Property”. It is only applicable for under construction flat.
VAT is not payable in case of purchase of a property from the developer, after the construction is completed and completion certificate is received.
3)A builder cannot charge Value Added Tax (VAT) on transaction for sale of flat effected after he has secured completion certificate for the project from the municipal corporation, the Pune district consumer disputes redressal forum has ruled.
4) in your case since completion certifcate is of oct 2015 and flat purchased in may 2016 no VAt is payable
1. According to one of the latest notifications by the FM applicable w.e.f. 01-07-2012 a builder or developer is liable to pay service tax if any payments are made by buyers, before the completion certificate is given. This cost is also passed on to buyers.
2. If payments are made after the completion certificate is given, then no service tax is payable. Hence if a property is under construction and you as a buyer pay a booking amount, this is considered payment towards sale consideration before completion certificate is given, and hence you will be liable to pay service tax at the rate of 10.30% of 25% of the sale value i.e. 2.575% of sale value.
3. VAT liability only arises upon completion of sale and not before ownership of property is transferred to the buyer.
You have stated that you have purchased the flat in May-2016 by paying a booking amount but the OC was received after paying the amount, i.e. after purchase. It clearly indicates that you have purchased under construction flat and not a constructed flat.
Accordingly you are liable to pay the service tax at the rate as applicable. The liability for VAT may be applicable after buying the constructed flat