Buying a home within municipal limits vs gram panchayat areas
Investing in property in a gram panchayat area can be a lucrative opportunity, especially if the locality is slated to be included within the municipal limits in future
buyers to approach the department seeking refund of service tax paid to developers. Given the above, the flat buyers may consider taking the following steps in order to obtain refund of the service tax paid to developers.
Form a group of residents interested in seeking the refund, and compute the service tax paid by each flat buyer
Collate the flat buyer agreement and invoices raised by the developer from time to time mentioning the service tax amount, and receipts confirming the payment of said invoices
Approach the developer with a copy of the High Court order and apprise them of the legal position
Ask for the copy of service tax returns filed by the developer during the relevant time along-with challans for deposit of tax
Get an undertaking/affidavit signed by the developer that entire service tax collected for the project has been duly deposited with the government
Approach the service tax authorities with the above documents and seek refund of the service tax amount While the High Court directed the government to refund the service tax to the two petitioners in the case, for others, getting their money back may not be devoid of challenges.
For starters, the buyers may face stiff resistance from developers for providing the service tax returns and payment details. This is because generally, the returns filed by the developers would relate to multiple projects and identifying compliance
against an individual project may not be possible. Further, providing returns and challans for scrutiny of the department officers may not be in the best interest for developers as it may lead to unrelated tax issues cropping up.
Even if the developer agrees to give the documents as mentioned above, the tax authorities may want a detailed break-up ( project- wise/ individual flatwise) of the amount of service tax paid by the developer.
This can be a herculean task for developers filing single returns for multiple projects and in that case, flat buyers will need to work backwards with the developers to ascertain such amounts and get the same certified by a chartered accountant.
Also, given the wide ramifications of the decision, it is highly likely that the department may file an appeal before the Supreme Court and pending
decision of the Supreme Court, deny the refund of service tax citing that the matter is sub judice.
For projects where the construction is still not complete, the homebuyers can explore the possibility of approaching the developer to adjust the amount of service tax paid between 2010 and 2012 against any future service tax liability on their flat. From a statutory stand point, such adjustment can be allowed.
While seeking refund from the service tax authorities may have its challenges, given that each flat buyer may be able get a refund of asubstantial amountof money paid as service tax before year 2012, it may well be worth the effort to pursue the same after due legal consultation.
The decision of whether t o purchase a home within a city’s municipal limits or in one of the gaothan / gram panchayat localities can be a perplexing one. There is usually a significant cost arbitrage implied in the second option, but it often does come with drawbacks as well. Let us examine both options.
Investing within municipal limits
There are definitely distinct advantages to buying a property which falls within the city’s municipal limits. For instance, such properties can usually depend on a more regular water supply from the municipality. Infrastructure is another function for which the municipality is responsible, so projects within the municipality limits tend to have better roads. There will usually be a very decent saturation of shopping outlets and hospitals in such localities.
Also, the population residing within the municipal limits is usually of a more cosmopolitan nature. The downside is that properties in such areas tend to be expensive with high property tax as well as maintenance charges when compared to gram panchayat areas.
Investing in a gaothan/ gram panchayat area
Gram panchayats or gaothans are basically village areas. Though many of them have seen rapid development, the fact is that this development is largely opportunistic. Developers are