Service Tax/VAT on Builders in Maharashtra

Service Tax

Applicability of Service Tax –

Service Tax is applicable on Units sold/ Booked and on Units for which any money is received before issuance of Certificate of Completion.

Rate of Service Tax –

12.36% on 25% of Sale value (3.09% on Total Sale Value), if the Sale Value is Less than 1 Crore and Saleable area is Less than 2000 Sq ft

If not then Service tax is 12.36% on 30% of Sale Value (3.708% on Total Sale Value).

Point of Taxation (When Service Tax has to be Paid) -

The service tax has to be paid as and when the part payments (Booking Money, Slab wise Payments & all other payments) are received or becomes due, whichever is earlier

Input Tax Credit –

1.       Credit of Excise is not available as per Cenvat Credit Rules

2.       Credit for services used specifically for construction such as Service Tax on Architect Fees/ Payment to contractors etc is  available.

VAT

1.       VAT is applicable on Units sold/ Booked and on Units for which any money is received before issuance of Certificate of Completion.

2.       VAT is not to be collected from buyer, it is payble by developer (Compostion Scheme)

3.       Composition VAT Rate is 1%

4.       No Credit of VAT paid on purchases is available

5.       Tax is levied as and when the installments become due and payable or are received, whichever is earlier.

[I have taken service tax rate @ 12.36, it may change to 14% or 16% (14+2) when notification arrives]