Service tax and VAT is applicable to all under-construction property transactions.
However, their actual value varies with states in which the property is being constructed.
Service tax shall 14.5% to the 25% of the cost of the property.
The basic cost of the property you pay includes the cost of land and construction.
VAT is levied on the sale of goods (movable properties).
This tax is governed under the ‘works contract’ in the VAT law. For instance, VAT is charged at the rate of 1% of the ‘agreement value’ in Mumbai and Pune and 5% in Bangalore, but there is no VAT levied for apartments purchased in Noida-NCR, Chennai, and Kolkata.
now you can calculate the applicable tax and compare it with the figure demanded by the builder.