Property Service Tax for Under Construction Flats

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  1. Anubhav Tripathi

    Anubhav Tripathi New Member


    I have recently booked a flat in Greater Noida with Paramount Builders. While paying for the flat, I have noticed that I was being charged service tax at 4.35%. My flat is 1075 sq ft and its cost is approx 35 lacs. Now the builder said rate will be charged at 4.5%. I have read your article which states that service tax in this case should be charged at 3.75% i.e. 15% of 25% since the flat is below 2000 sq ft and cost doesnt exceed 1 crore. Previously I should have been charged at 3.625%, but I was charged at 4.35 %. That means I am being charged at the rate of service tax on 30% of cost.

    Has there been any change in the service tax rules regarding under construction flats after the article was written?
    If not, what proof can I offer my builder that the rate should be 3.75% instead of 4.5%? Is there a official site where I can check the latest rules, and is there a portal for complains regarding extra service charged? As builder has already submitted the service tax, can it be reclaimed by me if its indeed in excess?
  2. ZED

    ZED Well-Known Member

    The current rate of 4.5 % is correct because now the tax rate is computed as follows
    15% X 30% = 4.5%

    But earlier rate might not be correct.What is the date for the tax @ 4.35% ?


    Specified Abatement as per Notification (26/2012-ST) w.e.f. 01-04-2016:

    Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority- 70%

    Tax amount : 15%x Value( 100%-70%)

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