The service tax department has collected Rs 20 crore from several builders in the city after a survey from November 11.
Officials said the builders had collected Rs 50 crore as service tax but had not paid it to the government. They have promised to pay the balance in a week.
All builders and construction companies have to pay the tax on construction of flats, malls, offices and industrial buildings.
If any amount is collected from the prospective buyers, builders have to pay the tax on it. The rate of service tax, when property along with land rights are sold, is about 2.6% of the payment.
The Maharashtra Chamber of Housing and Industry has challenged the constitutional validity of the tax levy before the Bombay high court (HC). The HC had ordered that till disposal of the appeal, the department should not take action for recovery and directed that the builder should deposit the amount in court.
Evasion can lead to imposition of penalties and launching of prosecution, where the court can order imprisonment for up to three years.