The expert, Dhiraj Jain is Partner- Real Estate SNG &
Service tax on property
I bought a 2-BHK flat in Dombivli and have completed the
registration process . I received a letter from the
builder informing that I have to make the payment of
service tax. I have learnt that I can give an
undertaking /indemnity to the builder or give a bank
guarantee which the builder would be able to encash once
the legislation is passed by the government.
The letter from the builder also mentions that monies being collected will be
utilised as provisions in the service tax account and in case if there is any
delay in making the payment to the builder, it will attract penal interest.
Please advise. Gannesh Rao
Unfortunately there is no uniformity in the approach. Few builders may apprehend
as to what if the service tax amount may not come later on, and ultimately the
developer has to bear. Hence you may approach him and suggest the alternatives,
however it is at his discretion.
Booking & advance payment
I booked on flat in Kalyan. Twenty percent cost of the flat will be borne by me,
rest by the bank. I paid to the builder half of 20% in November 2011 with the
oral assurance from the builder that the agreement will be signed by December
but they asked me to pay the remaining half of my contribution.
They have booked one flat. Now when I asked about the agreement, they are saying
that their papers are with the municipal corporation but they are not sure when
they will be approved. So they can't say when the agreement will be signed.
They are now demanding the remaining amount of the 20% contribution. Should I
make the payment? If it gets delayed beyond reasonable time can I claim interest
on my contribution?
As per Sec. 4 of the Maharashtra Ownership Flats and Apartments Act- it is
mandatory on the part of the promoter to enter into a written agreement before
he accepts any sums of money as advance payment or deposit which shall not be
more than 20% with each of the persons who are to take or have taken such flats
and hence you should make the balance payment only once the developer is ready
and willing to sign the Agreement.