Refund on Service Tax on Apartment

http://www.thehindu.com/pp/2009/02/2...2850020100.htm

Service Tax exemption: some relief to buyers
hi shanvy,

selam.

do you have any idea of this tax relief and i got a clarification from the author but still i could not able to understand. could you throw a light.

Bullu,

I am still having my own confusion. but from what i could understand as a layman,

The service tax will not be applicable hence forth. actually the service tax option came in when the construction was contracted,to a party b, while the buidling was sold by A.
If there is a clause that clearly mentions that you have to pay this @ as service tax, and you have proof, you can ask your builder to refund.

provided,
the builder has paid service tax paid to the Government.
the claim has been filed within the time limit,
and if the builder has already recovered this from the buyer (that is where the refund as a person comes into play)

Now, for the procedure, we need to prove that the builder has taken a refund since for the service tax you cannot go in for a individual claim.
You can always ask for the details and the commissioner of tax under the Right to information and verify. then you can aask the builder to pay you a refund. if he refuses, you can take legal action against him, provided the agreement was not a open ended and you have proof of service tax paid.

Have I confused you...
bonk

Shanvy,

TA for your prompt clarification. Belive me you are not confused. As you know im in the hands of two builders and take up the issue with them and both of them are pretending to be ignorant of this issue. However so far i didnt pay any tax to them. let me check their pulse once again and come back to you.

meanwhile, sending the clarifications received from the author for your information-

Thanks for your mails. In fact, we have received more than 200 mails seeking clarifications on service tax on residential complex, in the past 5/6 days. Most of the readers have sought similar clarifications and hence we have tried here to clarify such common issues in general. Kindly go through the clarifications below, which may address your particular requirements. If not please revert back to us. We will try to solve your particular queries.


For more clarity, we have enclosed herewith a notification dated January 29, 2009, issued by Central Board of Customs and Excise clarifying that service tax is not applicable to residential complexes.


1. The Board has clarified that based on the existing provisions of the Law the builder need not charge Service Tax on the sale of flats. Since this is only a clarification it is applicable retrospectively. Your attention is invited to the last paragraph of the Circular No 108/02/2009-ST dated 29^th January 2009 which clearly says that all the pending cases may be disposed off accordingly. Hence this clarification is effective retrospectively.


2. The buyer of the apartment cannot claim the refund from the builder, if the builder has already deposited the money with the Government.


3. The buyer can claim refund from the builder, if the Builder has not yet remitted the service tax collected to the Government.


4. The Service Tax was not applicable right from the beginning of construction, but was to be collected and paid at the time of completion of the project. As such there was no need not collect the same from buyers. Some builders, if they have collected in installments and if such amounts are not remitted to the Government, the buyer can now claim refund from the Builder.


5. The builder cannot ask for Service Tax on car parking space, as per the circular.


7. The service was considered applicable where there were more than 12 units in one project. The number of units was decided on total number of units on one project that may include few blocks, few independent units, few apartments etc. As per the new circular, Service Tax is not applicable for any residential complex, even if it contains more than 12 units.


8. The clarification of non applicability of service tax, as per the above referred circular is only connected with residential complex. And if you are constructing your own house, the service tax is applicable to the various service providers connected with construction.


9. Service tax as applicable to Association of Apartment owners continues to be applicable.



Thanking you,

Yours truly,

Deshpande R P


Disclaimer: The views expressed here are personal views of the author. Although we have taken utmost care to provide the updated and correct information, we will not be responsible for any mistakes/omissions/incorrect information. The readers are further requested to consult Chartered Accountants for their specific requirements.

Bullu,

By two builders, do you mean two projects or single project with two builders.

If you have not paid any ST, you cannot claim an refund. You can get a refund from your builder if and only if there is a mention in your sale deed.

All the best.

hi shanvy,

i mean two projects. i didnt paid anything so far, but not sure whether it is exempted to me or not. my contract with them says i should Sales/service tax 12.36% as and when demanded by the Govt.

Hi, does refund of service tax also mean that tax on club house member ship will be waived?

Originally Posted by Bullu

hi shanvy,

i mean two projects. i didnt paid anything so far, but not sure whether it is exempted to me or not. my contract with them says i should Sales/service tax 12.36% as and when demanded by the Govt.

Great going bullu. both are independent or apartment complexes. yes when the government demands you have to pay. this is for the services of the complex.

Originally Posted by rmvs19

Hi, does refund of service tax also mean that tax on club house member ship will be waived?

Common areas that are the staircases, clubactivities and other facilities are not of absolute ownership of a unit owner but a common property of the whole complex and any kind of post-construction services are also included as part of construction activity for the purpose of service tax.

(This is my understanding alone. please consult a tax person. I am a layman and I do not have any authority on the subject.)

Thanks for your reply Shanti,

you are welcome. do clarify if you come to know of more details...

Hi shan,

Ta. Since i am paying tax (ST) to the builder/ developer and can i have a right to ask them for any proof / documentary evidence. Do you think it will work out with my unscrupulous builders.