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Can builder charge service tax once paid for all amenities?
21-Oct-2023 (In Property Law)
I am going to purchase ready to move flat in sector 48 noida. This is society flat, Each building is 6 to 7 Floor, where Car Parking, and power backup facility provided by builder. After the flat price they charge Electric connection Charges, Power backup charges, Register Charges, they say one More charge of Service Tax 4.5%. Is it Genuine of Register charges in this society for builders name.
What does Flat Purchase Agreement provides for payment of service tax and value of the land? how is construction value and property value are separated and valued?
I would like to inform you that Service Tax can only be levied on services and not on sale of good/immovable property.
In your case, Service Tax won't be levied on the value of land and would only be levied on the construction services provided by the Builder/Developer as per rates in force.
Further, Service Tax shall be collected if the Builder/Developer provides the purchase of land and the value of construction services separately.
There is also a notification in 2012 wherein it has been provided that Service Tax would be payable only on 25 % of the total purchase price as value of property and value of service of construction provided by the Builder/Developer are difficult to segregate.
I would like to inform you that Service Tax can only be levied on services and not on sale of good/immovable property.
In your case, Service Tax won't be levied on the value of land and would only be levied on the construction services provided by the Builder/Developer as per rates in force.
Further, Service Tax shall be collected if the Builder/Developer provides the purchase of land and the value of construction services separately.
There is also a notification in 2012 wherein it has been provided that Service Tax would be payable only on 25 % of the total purchase price as value of property and value of service of construction provided by the Builder/Developer are difficult to segregate.
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Adv. Siddhant Sharma
Delhi | 500+ Answers
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