Service tax on buying house

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jindesaab asked 8 years ago

Good morning brother Srikanth, Sir, I bought a independent house from builder at kurnool city of Andhra Pradesh by availing house loan. It is a gated community venture and my house is about near to complete. All part loan payments made to builder. While executing sale agreement and construction agreement, the builder did not reveal about payment of service tax. Now he is pressing hard for payment of service tax @ 4.5 percent on sale amount. My query is am I liable to pay service tax ? Is the builder asking correct? And what rate of percent will the service tax. I am in confusion. One more thing, is occupancy certificate is required to be got from builder who may get from civic local body? Please elucidate. Thank u

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Sreekanth Staff answered 8 years ago

Hi, Kindly go through below points ; Property for which completion certificate has been issued: No GST is applicable on ready-to-move-in or completed property as per the CGST Act, 2017. Under Construction property when part consideration has been paid to the builder: The buyers are liable to pay 4.5% service tax applicable on the invoices raised or consideration paid before the July 1, 2017. However, payment made by the buyer to the builder on or after July 1, 2017 against invoices issued on or after July 1, 2017 shall attract GST at the rate of 12%. Under construction property when entire consideration paid to the builder before GST rollout: There is no GST payable on such property even if the construction is completed after July 1 2017. This transaction will attract service tax at the rate of 4.5% because as for the point of taxation rules, 2011, the transaction attracts service tax and not GST.
In case builder is getting OC from Civic bodies, kindly take it. Related article : https://www.relakhs.com/occupancy-certificate-possession-certificate-completion-certificate-meaning-importance/