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I am Ambika and am working in Bangalore. Here, I booked one flat (and got flat registration based on Undivided land) in Sep-04 which was under construction and expected to be completed in June-06 end. I have paid the gross amount (Flat Value) in 8 installments starting from Sept-04 to June-05 (I am supposed to pay sales tax in last week of June-05) I came to know that service tax is now applicable on Flat purchased from 1st June 05. I am in doubt whether I have to pay service tax or not. Please clear my doubt and let me know whether service tax is applicable or not for those who have booked (and registered) the flat in Sept-04 but flat completion is in June-05. If yes, then how much will be the service tax.

- by Ambika Maheshwari, Bangalore

Service tax on residential complex has come into effect from 16.06.2005 and rate is 10.2% including surcharge and is payable on gross amount charged by the builder less land cost, stamp duty and registration charges. The service tax is applicable to residential complex having more than 12 units. If the builder has not completed the construction and handed over the possession by 15.06.2005, the service tax is applicable. The builder may also avail of concession on tax up to 67% of the amount provided he has complied the conditions stipulated in notification 18/2005 dated 07.06.2005. The builder will pass on the component of the tax to the purchaser.


These are all the legal questions answered by Advocate S.Selvakumar in various magazines, in various occasion including realestate reporter monthly.