Property Service Tax Do you know that service tax is also levied on property. Yes, you heard it right, service tax is also applicable on property. Let’s know the complete details about it
New Delhi, do you know that service tax is also levied on property. If not, then definitely read this news carefully. Actually, service tax is levied on the services provided by a business. In the real estate sector, service tax is levied only on under-construction properties. It is charged on any property, building complex or civil structure offered for sale. Service tax is levied on under-construction property by the builder or real estate developer at the time the building complex, civil structure or parts are offered for sale. However, the payment is received before the completion certificate is received by the component authority.
Discount is available in these cases
Exemption in respect of Service Tax on property is available only in:
- Service tax is exempted on the sale of a single owner stand alone residential building.
- Apart from this, low-cost houses whose carpet area is up to 60 square meters. In this, the housing project should be approved by the competent authority under the scheme of Affordable Housing made by the Ministry of Housing, Government of India.
Will ready to move in property be taxed?
There are two types of properties – ready to move in or under construction. Basically no service tax has to be paid in ready to move in property. This is because the property developer is selling a property which has been completed. Due to this, no service is being provided to the buyer of the property. Property transactions attract high taxes and there are many opportunities for taxpayers to save tax. Therefore, it is advised that one should take professional tax advice before entering into any property transaction.
These documents will be needed
The following documents are required to pay service tax:
Property details
- PAN card of the buyer
- Service tax registration number of the property developer
At what rate is tax applicable?
- The rate of service tax on property is 3.75 per cent or 4.5 per cent, depending on the size of the property and the value of the transaction.
- Service tax has to be paid by the fifth or sixth month of the month. Service tax has to be paid in the month of March, which has to be paid by the central government by 31st March in the calendar year.
