Chartered Accountant

I am confused as to what abatement has to be taken with respect to Construction of Residential Flats, where there is a Tripartite Agreement between The Builder and Land Owner & the buyer of the Flat.

Answer from the Point of view of the Builder of the Flat who is the Service Provider in the case.

Whether  Notification No. 24/2012 - Service Tax 



             Notification No. 26/2012- Service Tax

(                    ????


Notification No.24 talks abt - 

In case of  works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract;


Notification No.26 talks abt - 


Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority

Abatement of 75 %


(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii)The value of land is included in the amount charged from the service receiver.



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75% abatement is available when the flats are intended for sale and land value is also included in the gross consideration. In this case builder enters in to agreement to sell with the buyers. In other situations, construction agreement is entered in to with the buyer after transfering undivided share in land. Here 40% of the gross amount is the value of service.

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Chartered Accountant

Thankyou Sir for your valuable reply.

My case is where construction agreement is entered in to with the buyer after transfering undivided share in land. So accordingly 40% of the gross amount is the value of service. 

This abatement would be with effect from which date?

I would also like to know the the implications of this notifiaction?

Earlier the client used to take abatement of 67% and charge to ST 33% as value of service. Now with this abatement what would be the implications to the client company?

Also will there be any Reverse Charge of ST by virtue of Notification No. 30/2012-Service Tax )




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Service Tax Consultant Rourkela

This is an old query, still i am giving my view, in case it is of any use for anyone...


The most specific service related to the builder is 'construction of residential complex'. N/N- 24/2012 (Rule 2A of Valuation Rules, 2006) is applicable for Works Contract only. But, for construction service, abatement of 75% is available vide N/N-26/2012.

As per Section 66F, a more specific descripttion shall be preferred over a general descripttion. 


thanks R.Sarath chandar




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