Abetment rates on work contracts


15 April 2013

Please tell me
Abatement Rates on work contracts.
interest basis on days basis or Month wise

CA Vikas Acharya (Expert)
15 April 2013

As per Service tax valuation rules,
Rule 2-A,
There are 2 options, according to option 2 the following part is only taxable and remaining is abatement.
In case of original contract 40% TAXABLE
In case of MRRR of any GOODS 70% TAXABLE
Other than above two( eg: glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property) 60% TAXABLE
Remaining is abatement..
Total amt charged is Gross Amt Charged +FMV of all goods & services given by SR in relation to that – Amount charged by SR for the same including vat if any. (this is done because to save s.tax SP say to SR u give all the material and service amt is less)

Interest will be calculated on days wise.

Manish Jain (Querist)
16 April 2013

thanks sir,
my question related to receiving advance booking amount of flat and each flat costing or sell amount over 1.5 crore. (amount taken on the opening day of project)

CA Vikas Acharya (Expert)
16 April 2013

when a flat is sold in a complex kind of construction (not a single residential unit), then with that the LAND also transfers hence that do not fall into works contract (which you asked) instead it falls in construction services,
where the abatement is 75 percent prior to 01.03.2013
after 01.03.2013 it is 70 percent (If carpet area upto 2000 sq feet)
refer notification 02/2013 DATED 01.03.2013

Manish Jain (Querist)
16 April 2013

thanks sir
actually i want to file service tax return of a builder/developer who purchases land and construct resdential home on that land and sell out. the builder taken advance booking amount from sundry customers and above amount taken in jan 2013.

CA Vikas Acharya (Expert)
16 April 2013

same case as i replied the 2nd time. land is getting transferred to the purchasers.
service = construction service
abatement = 75/70 percent, as the case may be
( 75% prior to 01.03.2013)
(70 % after 01.03.2013, only if satisfies the condition mentioned above.)
it is a declared service. tax is payable if a single penny is received before fully completion of construction.
also as per point of taxation, it is continuous supply of service.
tax payable on the basis of completion of every event or amount received, whichever is earlier.

Manish Jain (Querist)
16 April 2013


CA Vikas Acharya (Expert)
16 April 2013

dear you have to do a lil work yourself :-D
when a single resedential unit made no tax as exempt by 12/2012. when a complex is made, there is tax whether that is commercial or residential for sale. but construction service for hospitals and educational insti. exempt.


Manish Jain (Querist)
22 April 2013

Registration of builder/developer in service tax in which head (when he purchased land and construct flats /units and sold out (more than 12))
1.""Residential complex"" (in this scheme there are swimming pool and fun club facilities are available( Paid-Facilities))
2. ""Commercial Complex"" (When above Facilities available)
3. Residential cum Commercial (with above facilities)

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