Service Tax/VAt on putcahse of flat and Income tax

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  1. sabale

    sabale New Member

    I booked a flat (ready-to-move) in Nov 2014, paid some margin money, Stamp Duty, Registration fees, VAT, Service Tax in Jan 2015. Done agreement for sale in feb 2015. Sanctioned home loan has been disbursed in feb 2015 in one instalment as builder produced 100% work completion certificate for the said Buildling from architect dated Oct. 2014. Would get possession in march 2015, if I pay rest 1 lac margin money and maintenance charges. Completion certificate from competent authority is yet to be received as one building in the project is yet complete. But possession can be done( is this legal?). My query is:
    1. I am feeling cheated on Service Tax and VAT (Maharashtra) issue as building work was already completed and Builder took these from me. I paid single cheque for full service tax and another cheque for SD+Reg+VAT. Are these taxes: VAT and Service Tax legal?
    2. May I claim accrued interest (till 31st March 2015) benefit on home loan in FY 2014-15 by filing income tax return, (if chose to take possession in March 2015), even if first pre-EMI (will be paid in March 2015 and first Full EMI will be paid April 2015. This is because Bank will give me interest certificate only after first FULL EMI will be paid.
    1. Yes, Service Tax & VAT is to be levied on under construction property
    2. You can claim deduction only for the year for which you have the Interest certificate. If you have the interest certificate for 2014-15 - you can claim it for 2014-15 as well
  2. sabale

    sabale New Member

  3. sabale

    sabale New Member

    Thanks Madam.
    My concern is, already building is ready as per certificate from architect, is it still under-construction property?
  4. Shishir Nayak

    Shishir Nayak Member

    Answer to your Qstn No
    1) In the case of ready-to-occupy flats, service tax is not payable as the construction is carried out by the builder/developer on his own account and later sold to independent buyer.The cost of Flat that you have purchased is inclusive of service need not pay Extra amount for that.
    VAT- As sale of ready-to-occupy flat amounts to sale of immovable property, VAT is also not applicable on such transactions. However, the sale agreement should not have been entered or payment made before the completion certificate is issued.

    So Yuor Builder id cheating You.

    Answer to your Qstn No
    2)The interest paid for a loan on the first home is eligible for deduction up to Rs 1.5 lakh under Section 24(b) of the I-T Act (for the second home, the entire interest payment can be deducted from the income that is earned from it) and These deductions are allowed only for properties that are ready.

    If You Want you can apply Sec 80c for deduction of principal amount but that is upto 1 Lakh.

    If u want further clarification email me @ [email protected]
  5. @sabale : For a building to be considered as completed, the govt authority should issue the completion certificate.

    The Completion Certificate issued by an Architect will not be considered in this case.
  6. sahsumeet

    sahsumeet New Member


    I purchased a under construction flat in Mumbai and already done a registration of the property and construction is going on. My query is as below:

    i.My builder is asking me to pay service tax+Vat on the entire arrangement value (however according to construction payment term only 50% of work is completed).

    ii. How to check whether builder is paying ST+VAT to government as in the receipt no TIN and service tax no is printed. How to cross check if I get the service tax and TIN no. of my builder.

    Awaited for your early reply...


  7. Parul_Gupta

    Parul_Gupta Active Member

    @sahsumeet - Service Tax and VAT would be applicable on the full agreement value.
  8. sahsumeet

    sahsumeet New Member

    Thanks @Akanksha23...

    My query builder is asking me to pay full amount(100%) of service tax on total Agreement value +VAT(1%). However construction is on going on (50% of work is completed).

    He is only giving me a plain receipt without mentioning ST & VAT no., How can I cross check whether builder is paying ST+VAT to government?

  9. Divye Miglani

    Divye Miglani Member

    If the builder is not paying these taxes - the govt will issue a notice to the builder.

    As per Law - It is your responsibility to pay to the builder and then builder's responsibility to pay to the govt

    If he does not pay - govt will not say anything to you but catch him
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