Do One Needs To Pay Service Tax And VAT In Resale?
Question asked by Vikas Verma from USA:
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.
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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