Business Daily from THE HINDU group of publications
Monday, Nov 13, 2006
ePaper
Business Daily from THE HINDU group of publications Monday, Nov 13, 2006 ePaper |
|
|
|
|
|
|
|
Mentor
-
Taxation Industry & Economy - Real Estate & Construction Columns - At Your Service Service tax on residential complex
I had purchased flat in Pune. The booking was done on June 1, 2004, and the registration of the flat, on July 31, 2004. I got possession of the flat on July 1, 2006. The builder is now demanding service tax. Should I pay service tax? With effect from June 16, 2005, construction services relating to residential complex have been brought under the purview of service tax. As per the definition contained in Section 65(105)(zzzh) of the Finance Act 1994, a service provided or to be provided to any person by any other person in relation to construction of a complex will attract service tax. As per Section 65(30)(a) of this Act, construction of a complex includes that of a new residential complex or part thereof. Further, a `residential complex' is defined as a building or buildings having more than 12 residential units, a common area and facilities or services such as park, lift, parking space, etc. Therefore, if the flat you have purchased is part of a complex having more than 12 residential units, then service tax will be attracted for the construction service utilised. To determine the tax liability, what is relevant is whether on the date of providing the service it is defined as a taxable service. In your case, you have indicated that the booking of the flat was made in June 2004 and the registration done in July 2004. It appears that the reference here is to the registration of the undivided share of the land and not the flat as such. Since you have taken possession of the flat only in July 2006, it appears that the construction has been completed only by that time. As the service has been provided when it is liable for tax, service tax has to be paid, notwithstanding the fact that an agreement was made for utilising the service during June 2004. With regard to the value on which service tax has to be paid, in respect of construction of residential complex services, exemption to the extent of 67 per cent of the gross taxable value of the service is available subject to the condition that the service provider, that is, the contractor or the builder (i) has not utilised the facility of credit of duty or taxes paid on the inputs and input services, and (ii) has not utilised any benefit of tax exemption in terms of service tax Notification 12/2003 with regard to exclusion of material/goods cost from the value of taxable services. In such a case, it will be sufficient if you pay service tax on 33 per cent of the value paid by you to the builder for the construction of the flat.
Send in your queries to MentorAtYourService@gmail.com
S. Murugappan
More Stories on : Taxation | Real Estate & Construction | At Your Service
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|