Expert: Vinay Singh, Tax and Legal Expert.
Question: I purchased a flat in Panvel. The builder is asking for a Service Tax at 4.5% and MVAT (1%) component of agreement value. MVAT is paid by cheque to builder's bank account and in return they have issued a plain receipt on letter head with revenue stamp. Are budget homes exempt from these taxes?
Answer: The rates mentioned by you are correct. Service tax is chargeable at 4.5% of the value of the flat. The exemption you refer to is for projects where each house is upto 60 sq. metres in a scheme of affordable housing in partnership approved under the Ministry of housing and poverty alleviation.
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