• Sale tax and VAT on newly purchased property

I have purchase 1BHK flat in DEC2009. Till data I dont get possession. Recently i got notice from Builder to Pay Service Tax and VAT. 
Property Value :- 1718040
Service Tax is calculated :- 35952 /-
VAT Calculated :- 85902/-

Is these taxes application on my case ?
If Yes how much tax I have to pay and what a time limit.

Asked 2 years ago in Property Law from Pune, Maharashtra
Religion: Hindu
If you had purchased flat in under construction project you have to pay service tax and VAT 

2) VAT is applicable only on material cost of project @14.5 per cent . VAT may vary from state to state 

3) service tax is applicable only on labour and services cost of the project 
Ajay Sethi
Advocate, Mumbai
44368 Answers
2577 Consultations

5.0 on 5.0

 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. 
T Kalaiselvan
Advocate, Vellore
34540 Answers
372 Consultations

5.0 on 5.0

1. If payment is 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.

2. To pay VAT is the liability of the builder.
Ashish Davessar
Advocate, Jaipur
22966 Answers
631 Consultations

5.0 on 5.0

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