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Do I have to pay service tax on my home loan?
What percentage is it?
And, when is it paid?
- Sachin
I took a home loan in December 2005 and registered the flat that very month, which is the last financial year.
Would I have to pay any service tax on it? If yes, how much?
- Shrinivas Kulkarni
There is no service tax on the interest paid on a home loan.
It goes without saying that there cannot be any service tax on the principal portion repaid to the bank.
There will be a service tax on the other charges such as the loan processing fee. The service tax is currently 12.24% and is payable along with the fees.
The answer to the question on how much the service tax will be will depend on the contract between you and the developer. Most such contracts provide that any tax payable by the developer will be passed on to the consumer by way of additional cost.
The only thing to safeguard is that if the amount being paid is demanded as service tax, the developer must quote his service tax registeration number.
This will ensure the developer is actually demanding a tax he will pay to the government and is not making a fast buck under the pretext of collecting service tax.
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