Service Tax and VAT on Flats in Indore

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  1. Amandeephora

    Amandeephora New Member

    Hi All,

    We are in the process of acquiring a ready-to-move residential flat in Indore, Madhya Pradesh for self-occupation directly from the builder of the project. While informing us about the total cost, they have levied service tax @ 3.62% and VAT @4% on the agreement value over and above the stamp duty charges. As far as I understand, service tax is applicable only for under construction properties. Moreover, my father spoke to a builder friend of his in Indore itself who said VAT used to be applicable some time back but the same has now been removed vide some recent notification from the department (which he is not able to find and share with us) and further said builders now play around with the extra 4% .

    Upon checking with our broker/builder, they said that they can't go ahead without these two taxes and further agreed to accept the payment towards the same in CASH!!

    Hence, would really appreciate if some one can help me with the relevant notification from the concerned authorities towards applicability of both the aforementioned taxes which we can present to the builder and make our case stronger.

    Many Thanks..!!
  2. Karan Batra

    Karan Batra Well-Known Member

    1. Service Tax is never levied on fully constructed flats. It is only levied on under construction flats
    2. I'm not sure about applicability of VAT on under construction flats in Indore
  3. Amandeephora

    Amandeephora New Member

    Thanks a ton Karan!

    Refer to point no.1, can you please let me know the relevant circular/notification from Service Tax Dept. which I can present before the builder/broker to strengthen my argument. This builder is charging approx. Rs. 1 lac per flat and there are 60 flats in the project.

    Will consult some local person on applicability of VAT toward which the guy is charging another Rs. 1.06 lacs per flat!!
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