Legal Corner » VAT http://legalcorner.atoneplace.com Free Legal Discussion from atOnePlace.com Legal Experts on Indian Real Estate, Taxation, Repatriation, NRI Issues, Mortgage for Indian Properties Mon, 28 Nov 2011 08:44:27 +0000 en hourly 1 http://wordpress.org/?v=3.0.1 Will I become party to evasion of stamp duty? http://legalcorner.atoneplace.com/mortgage-related-questions-issues/bank-financial-institution-that-services-savings-and-checking-accounts-provides-loans-and-deals-with-negotiable-instruments/will-i-become-party-to-evasion-of-stamp-duty/?utm_source=rss&utm_medium=rss&utm_campaign=will-i-become-party-to-evasion-of-stamp-duty http://legalcorner.atoneplace.com/mortgage-related-questions-issues/bank-financial-institution-that-services-savings-and-checking-accounts-provides-loans-and-deals-with-negotiable-instruments/will-i-become-party-to-evasion-of-stamp-duty/#comments Sat, 24 Oct 2009 08:20:39 +0000 atoneplace http://legalcorner.atoneplace.com/?p=1085 Question asked by Anonymous:
Hi I have a question to ask. I bought a house from Builder in Hyderabad in August 2006. The agreement of sale was for 33 lakhs. The registry was done at a lower cost 18 lakhs in august 2006 itself. The flat was under construction that time. I also took a loan of 27 lakhs from the bank for it. Now I am selling the house for 62 lakhs. The buyer is taking over my loan. The bank will give me a difference between loan amount sanctioned and selling price i.e. 30 lacs (Cheque) and the buyer will give me 5 lacs. So in total I am getting 35 lakhs in my account. Now the questions are:

1. The Buyer wants to get the registry of the flat done at 25 lacs. How is that possible as he is giving everything in white? How will I explain to income tax authorities as to where this 35 lac came from when I sold the house for 25 lacs (as per the registry) and where did I get the money (27 lacs) for prepayment of loan. Will I become party to evasion of stamp duty in this case? (There are two agreements, one is agreement of sale which shows the correct price on which the bank finances and the other is the sale deed which shows the amount in the registry and is registered)

2. What documents do IT authorities refer when calculating Capital Gains?

3. The builder is the agent through which I am reselling the flat. And I am paying him a commission of 100/- sq. ft. Now, I got to know that he is fooling the new customer by collecting service tax and VAT from him which is not applicable on Resale Flat. And he will keep that amount with him. Now the question is if the new customer some day knows that Service Tax and VAT was collected from him and is not applicable then can I be in trouble as the builder is just the agent, I am the Seller of the flat? What should I do?

Thanks in advance

Vatsala Answers:
1. The agreement of sale showing the full amount will protect you against income tax queries, despite the lesser value in the sale deed. You can show the extra amount towards fittings, furniture, right of use of car park, right of use of common amenities, deposits kept with builder for water, electricity and maintenance charges.

2. It is open to the IT authorities to rely on the sale agreement (if it is deposited with the bank) and the sale deed.

3. It is not correct for the builder to collect VAT and service tax again from the new purchaser. It should be accounted for under brokerage or some other account. In any case you need not collect it in your name. Vatsala

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Question asked by Vikas Verma from USA:

Dear Vatsala
I highly appreciate your efforts in resolving lot of property related queries. I am in a bit of a situation and need your help. I am planning to purchase a flat in Hyderabad, this is a new development. Developer started selling flats in this development in 2005, and the flats are ready for possession by next month ie Sep. 2008. There are few flats still up for sale from the developer. Lets say the price developer is quoting right now is Rs X / sft + amenities like car parking and common amenities like clubhouse etc (y) developer would charge + service tax (z) + VAT (A) and registration
(B). So the total cost of purchasing this flat for me would be X+Y+Z+A+B.
I have been speaking to a gentleman for purchasing a resale flat in the same development, he has got the flat registered on his name and there was no VAT and service tax when he purchased it in 2005, so he has not paid either VAT or Service tax for this flat. Could you please tell me what would be my total cost of purchasing the flat in resale if the value of flat is 0.9X that I am being quoted? To simplify it further would I be required to pay VAT and service tax if I bought this property in resale now, also, will I be required to do the registration and pay 10% / 12% what ever is the prevailing rate? Is there any way I could reduce the cost of registering this property in resale. This gentleman whom I am planning to buy the property is an NRI.
I would highly appreciate your inputs, apologies for any naivety since this is my first property purchase.
Cheers
Vik

Vatsala Speak:

On a resale flat no VAT or service charges apply. However registration and stamp duty charges have to be paid. This can be reduced by not showing part of the consideration in the sale deed (but only showing with the guideline value, which is less than the market value). You could show the other amount against fixtures and fittings in the flat or alterations/ improvements done to the flooring, etc.Vatsala

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]]> http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/indian-property-are-the-real-estate-projects-constructed-in-india/do-one-needs-to-pay-service-tax-and-vat-in-resale/feed/ 0 How much VAT should be paid? http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/bangalore/how-much-vat-should-be-paid/?utm_source=rss&utm_medium=rss&utm_campaign=how-much-vat-should-be-paid http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/bangalore/how-much-vat-should-be-paid/#comments Wed, 20 Feb 2008 02:12:42 +0000 atoneplace http://legalcorner.wordpress.com/?p=36 Question asked by Mr Moorthi Subramaniyan from Bangalore:

Vatsala,
Hi, I am Moorthi, recently I got registered my flat in a small apartment (it has 12 flats) in Bangalore.
My agreement with builder is Rs. 9L for land cost & Rs. 21L for construction (including electricity, water, registration etc).
My question is, How much VAT I need to pay (based on 4%)? Can you help me on this?
Regards
Mr. Moorthi Subramaniyan, Bangalore
Vatsala Answers:

Service tax will not be attracted for a complex where the total number of Apartments is 12. Regarding the VAT liability, it may not be payable on the entire amount of Rs.21 lacs. Definitely the amounts charged towards cost of registration and obtaining electricity and water connection should qualify for abatement. On the balance amount, the builder has two options for collecting VAT, viz., either the compounding option or the actual value option. If he prefers compounding option then the VAT is payable on the balance amount at 4% in Karnataka. If the builder chooses collecting VAT on the entire balance amount because it is more beneficial to him, then it is payable at 4% to 12% (depending on the construction material) on actual value added after taking credit for the VAT suffered on the inputs. While you cannot force the builder to choose a particular option, if the builder does not go for compounding option, then you can apply compounding rate of 4% on the balance amount as aforesaid and compare the same with the VAT charged by the builder and check whether it is more favorable. Vatsala

http://www.atoneplace.com

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]]> http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/bangalore/how-much-vat-should-be-paid/feed/ 0 VAT to be paid for an apartment http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/indian-property-are-the-real-estate-projects-constructed-in-india/vat-to-be-paid-for-an-apartment/?utm_source=rss&utm_medium=rss&utm_campaign=vat-to-be-paid-for-an-apartment http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/indian-property-are-the-real-estate-projects-constructed-in-india/vat-to-be-paid-for-an-apartment/#comments Fri, 18 Jan 2008 07:58:22 +0000 atoneplace http://legalcorner.wordpress.com/?p=30 Question asked by Mr L Chandrashekar from Bangalore:

Dear Sir / Madam,
Do we have to pay any VAT for an apartment? In my case, there are 175 apartments in the project.
Please let me know the details.
Regards,
Mr. L Chandrashekar, Bangalore
Vatsala Answers:

In majority of cases, service tax and VAT will be applicable. It does not depend only on the number of flats but on whether the builder has outsourced the construction activity or not. Vatsala

http://www.atoneplace.com

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]]> http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/indian-property-are-the-real-estate-projects-constructed-in-india/vat-to-be-paid-for-an-apartment/feed/ 0 Whether the Service tax and VAT are applicable to the customer or the developer? http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer-2/?utm_source=rss&utm_medium=rss&utm_campaign=whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer-2 http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer-2/#comments Mon, 10 Dec 2007 06:29:46 +0000 atoneplace http://realestatelegalcorner.wordpress.com/2007/12/10/whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer/ Question asked by Mr Rahul Saraswat from US:

I booked a flat 18 months back. The flat is now ready for possession; I need to do registration of the flat. Can you please suggest whether the Service tax and VAT are applicable to me? Do i need to pay service tax to the builder? There are 56 flats in this complex.
Mr. Rahul Saraswat, USA
Vatsala Answers:

In majority of cases, service tax and VAT will be applicable. It does not depend only on the number of flats but on whether the builder has outsourced the construction activity or not. Vatsala

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]]> http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer-2/feed/ 0 Whether the Service tax and VAT are applicable to the customer or the developer? http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/indian-property-are-the-real-estate-projects-constructed-in-india/whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer/?utm_source=rss&utm_medium=rss&utm_campaign=whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer http://legalcorner.atoneplace.com/indian-real-estate-related-questions-issues/indian-property-are-the-real-estate-projects-constructed-in-india/whether-the-service-tax-and-vat-are-applicable-to-the-customer-or-the-developer/#comments Mon, 10 Dec 2007 01:14:03 +0000 atoneplace http://legalcorner.wordpress.com/?p=21 Question asked by Mr Rahul Saraswat from US:

I booked a flat 18 months back. The flat is now ready for possession; I need to do registration of the flat. Can you please suggest whether the Service tax and VAT are applicable to me? Do i need to pay service tax to the builder? There are 56 flats in this complex.
Mr. Rahul Saraswat, USA
Vatsala Answers:

In majority of cases, service tax and VAT will be applicable. It does not depend only on the number of flats but on whether the builder has outsourced the construction activity or not. Vatsala

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