Delhi High Court : no service tax for under construction flats


Delhi :  A new judgment passed by the Delhi High court is likely to bring cheers to thousands of home buyers who have booked under-construction flats. Delhi High Court’s June 3 ruling that flat buyers will not be subjected to service tax by a builder/promoter/developer for acquiring a flat in a complex, which is under construction or development may prompt homebuyers to seek refund or relief. The HC has said that builders or developers cannot charge service tax from home buyers for under-construction property.

However, they can charge extra under ‘Preferential Location Charges (PLC). The judgment came in the wake petition filed by two buyers who had purchased flats from Sethi Buildwell Pvt. Ltd in the Max Royal group housing project in Noida's Sector 76.

The judgment applies to flats purchased before July 1, 2012.HC has also said that if the developer has already collected service tax, then buyers will get it refunded with 6% rate of interest by the revenue department.