Yes, service tax @14% is applicable for transfer charges payable to builder.
Is service tax is applicable in transfer charges
Is service tax is applicable in transfer charges of under construction flat ? During the sell of registered under construction flat (payment done 90%) builder is asking transfer charges for providing the NOC. he is also asking 14% service tax on transfer fees, is it applicable?
Asked 9 years ago in Service Tax
No service tax is not payable on transfer charges for providing NOC for transfer of under construction flat.
Firstly, You need to check that whether transfer charges paid to builder is legally valid under the following acts or not
1. Transfer of Property Act, 1882
2. Indian Contract Act, 1872
3. Competition Act, 2007
In most of the above acts, transfer fee to builder is illegal in certain cases.
If not so, then you may have to pay service tax.
For any other query, you may contact us at : ca.skagarwal@gmail.com
thanks to all of you for your answers. I read in service tax book quote "The said definition further provides that ?Service‘ does not include – - any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner " so as per my understanding this service should not come under the definition of service. please share your point.
Asked 9 years ago
yes there is no element of service in transfer of under construction apartment.
thanks though it is illegal but if it written in agreement between builder & investor ??
Asked 9 years ago
If it is written in agreement, still it would not be legally binding on you.
Rest is on your decision whether you agree to pay or not.
thank you sir
Asked 9 years ago
You cannot collect service tax by contractual agreement between the parties. For collection of service tax there should be a sanction of law. The collection of service tax which is not authorised by law is illegal. kindly caution your builder, he must be indulging such acts on higher scale.
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