VAT & Service Tax on purchase of Flat in Bangalore

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    SHIVA PRASAD A New Member


    I am planning to buy flat(1135 Square Feet) in Bangalore. The break up given by the builder(Firm) as follows,

    Flat Cost(under construction) : Rs 37,73,875
    Car Parking : Rs 1,50,000
    Other Amenities : Rs 1,50,000
    Total : Rs 40,73,875

    Registration+VAT and other applicable taxes if any are extra.
    As per my knowledge service tax is not applicable because flat area is less than 2000 square feet.
    Please give the total VAT amount payable and service tax amount if applicable in detail.
    Thanks in advance.
  2. Shishir Nayak

    Shishir Nayak Member

    No its not exemption its abatement. If your property is less than 2000 sq.feet or less than 1cr. than you have to pay ST on 25% of value or else 30%.

    VAT is not applicable to under construction property because VAT is applicable on movable property not on immovable property. So he is cheating you.

    SHIVA PRASAD A New Member

    The sale of any property that is under construction is liable to value added tax (VAT). In a recent case between L&T and State of Karnataka, the court announced the verdict that the pre-construction agreements of sale of immovable property qualify as "works contract". Hence, VAT is payable on all transactions dealing with under construction properties. Please confirm.
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    Supreme Court's larger bench in the case of Larsen and Toubro v/s State of Karnataka & Another (Civil Appeal No. 8672 of 2013), in September 2013 said that any agreement entered into by the builder/developer before completion of construction amounts to works contract and is, hence, liable to VAT.

    As a result of this judgement, State Govt.'s now have the power to levy VAT on under construction buildings. Some state govt's are levying VAT and some are not levying VAT on under-construction building.
  5. gaurav_kumar

    gaurav_kumar Well-Known Member

    VAT is applicable in the states like Karnataka & Maharashtra but not applicable in states like Haryana, Delhi, Uttar Pradesh
  6. Indrani.chall

    Indrani.chall New Member

    Please provide some clarity on how much is the VAT % on the property price. Is there any maximum limit to it. Online I could see it as 5 to 5.5% however my builder is charging me 9.5%. Not sure on what basis this has been charged.

    Service Tax has been charged as 14% of 25% of the total property price + Corpus Fund + Maintenance of 1 year. I feel this is correct, please validate.

    Any guidance here would be deeply appreciated.
  7. Yatin Gandhi

    Yatin Gandhi Active Member

    Service Tax has been charged correctly
  8. Roylen Topno

    Roylen Topno New Member

    I am planing to buy a ready to move flat in Bangalore. Builder is asking me to pay service tax as 10% on (basic cost+car parking+ BWSSB/KEB, Amenties+ GEN/Solar).

    Please let me know whether it is correct or not.
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