Service Tax On Property: Service tax will have to be paid on the property also, know when and how much..

Have you heard about service tax? Service tax is levied on the services provided by a business. Similarly, service tax on property also has to be paid. Property owners have to keep many things in mind while buying a house. Firstly, there is always confusion regarding whether service tax has to be paid on property. Today we will tell you when this tax has to be paid on property.

When a buyer buys a property, the ownership is transferred to that person and the seller becomes the service provider of that property on which service tax is payable. However, it has to be paid before the competent authority issues the completion certificate.

What is service tax and when is it imposed?
There are two types of properties: ready-to-move and under construction. 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. Builders or real estate developers levy service tax on under-construction properties when the building complex, civil structure, or parts are offered for sale.

No tax to be paid on ready-to-move
Ready-to-move-in properties mainly do not require paying any service tax. The reason for this is that the property developer is selling such property which is completely ready. It is not providing any service to the buyer of the property. Property transactions attract high taxes and provide many tax-saving opportunities to taxpayers. Therefore, it is advisable to seek tax advice from a professional before buying or selling any property.

Exemption is available in these cases
The rate of service tax on property is 3.75 percent or 4.5 percent, depending on the size of the property and the value of the transaction. There is an exemption from service tax on the sale of 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 Housing Ministry of the Government of India.

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