How to calculate service tax on flat?

Service tax was applicable to under construction properties before the implementation of the Goods and Services Tax (GST) in July 2017. It was levied on the services provided by developers during the construction of the property. The tax was not applicable to completed properties with a completion certificate. The service tax rate was 15% on the service portion of the property's value. However, to simplify how to calculate service tax on flat, the government provided an abatement, reducing the taxable value to a certain percentage of the total property value.

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Service Tax on Flat Calculation?

This abatement accounted for the value of land and goods involved in the construction:

1. Determine the Total Property Value: This includes the base price of the flat, excluding charges like parking, maintenance, and club membership.

2. Apply the Abatement: The taxable value was considered as 25% of the total property value.

3. Calculate Service Tax: Apply the service tax rate of 15% to the taxable value.

Example:

1. Total Property Value: Rs. 50,00,000

2. Taxable Value (25% of Rs. 50,00,000): Rs. 12,50,000

3. Service Tax (15% of Rs. 12,50,000): Rs. 1,87,500

Total Payable Amount: Rs. 50,00,000 + Rs. 1,87,500 = Rs. 51,87,500

Service tax was not applicable to single residential units or low-cost housing projects with a carpet area of up to 60 square metres. Charges for services like maintenance, parking, and club membership were also subject to service tax.

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What is Service Tax?

Hey, if you are wondering how to calculate service tax on flat. You have come to the right place. Every home buyer in this country is mandated by the Government to pay service tax on flats. Service tax is calculated according to the rules and regulations mandated by the state and central Government. 

Service tax of 18 percent is applicable on an under-construction flat, out of which the buyer is subjected to pay only 2/3rd, i.e., only 12 percent tax.

Service tax is not levied on renting immovable properties for residential reasons.

Service tax is applicable and levied over buying of immovable properties for residential reasons. Service tax is applicable only on construction components.Service tax is levied on the total value of other services including garage, the premium of high floors, etc

The process of calculating service tax on ready possession flat is easy. Let me share how.

For Properties wherein the worth is less than Rs 1 crore of value. Roughly 15%service tax is levied on the base price. In short, the current service tax rate for real estate in India is 15%.

Service tax is applicable by the state and central government on all residential as well as commercial properties. There are certain exemptions to this rule. Read below to see the exemptions:

• When selling a stand-alone residential dwelling, owned by a single resident.

• Properties that are ready to move in with an Occupation certificate 

• Buyers are not needed to pay service tax on property that is measured less than 650 sq ft.

Let me remind you that service tax has been replaced by GST(Goods and Services Tax ) from the year 2017. You can consult with your builder and accountant to know the exact number of service tax applicable on your property.

I hope my answer about how to calculate service tax on flat is helpful.