The Finance Bill 2010 has received presidential assent on 8th May 2010 and therefore a new chapter in taxing flat sale has started .In the definition of the taxable services of ‘Construction of Complex service’ [section 65 (105) (zzzh)], and ‘Commercial or industrial construction service’ [section 65 (105) (zzq)] given in the Finance Act 1994 now stipulates that construction of house (in any form – apartment / flat / row house / etc) by a builder in a complex is a “service”, and introduced the service tax of 10.3% on such a services .
Service tax will be applicable for only under-construction properties and not for completed units.
Special services provided by a builder etc. to the prospective buyers such as providing preferential location or external or internal development of complexes on extra charges [Section 65 (105) (zzzzu)] have also been brought as new service under service tax net.Service tax of 10.3% has also been levied on any payment made by you to the builder for getting a preferential location for your house / flat.
- Any amount paid for getting an apartment on a higher floor
- Any amount paid to get a flat / house with a specific number
- Any amount paid to get a flat / house facing a specific amenity, say a swimming pool, lake, park, sea, etc
- Any amount paid to get an apartment / house facing a specific direction (maybe as per vaastu)