On what basis service tax is charged on under construction flats

Question

On what basis service tax is charged on under construction flats

16-May-2023 (In Tax Law)

Hello Sir, I am willing to purchase under construction flat in Noida extension and below is the rate provided by builder. Please suggest if they are taking the correct service tax . As per my knowledge service tax should be on the 25% of the total cost if less than 1 crore and should not be taken on Preferred Location Charges (PLC), Floor Rise Charges (FRC), car parking, initial maintenance charges and club house etc Here I am paying 280730.415/- as service tax but I think this is not correct.

Answers (1)

Answer #1

Adv. Chikirsha Mohanty

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LawRato LawRato · Accepted Answer · 2016-05-16T18:50:01+05:30

Service tax is levied by the Central Government on the construction services offered by the developers to buyers. Presently, Service tax is 14.5%.
Though it sounds simple, calculation of service tax is a bit complicated due to its applicability to various cost heads. The basic cost of the property you pay includes the cost of land and construction. Service tax is applied only on the construction component. To simplify this, the government levies service tax on 25% of the cost of the flat. This effectively brings the service tax rate to 3.5%.