Under construction flat? Service Tax levy may be exempted

A High Court ruling is all set to bring cheers to thousands of home buyers who have booked under-construction properties before 2012. In a landmark judgement on a 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 HC has ruled 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 will be applicable to houses purchased before July 1, 2012. In addition, HC has also said that if service tax has already been collected by the developer, then the revenue department shall refund the same to buyers with 6% rate of interest.