Income tax & service tax issues

This query is : Resolved

CA SONIYA AGARWAL (Querist)
Follow

16 January 2015 one of my uncle has his own land and he decides to built residential dwellings in it , our family also booked 3 flats there , it has been 3 years now and flat is almost completed , upon registry the flat will be handed to us , since we have insufficient fund to discharge the liability of registry the acquisition of flat is still is pending .

The question my dads put forward before me is whether any obligation of capital gain will be on uncle , how will his this income on sale of flat will be accounted and what would be the tax implications .As regard the service tax , he asked whether any service tax liability has to be borne by us since the property was booked before construction began .

@*CS Siddharth Bumb. *

@*CS Siddharth Bumb. * (Expert)
Follow

16 January 2015 hello,
if your uncle's business is construction then no capital gain will arise.
It will be treated as business income.

Service tax : if you have paid any amount before completion of construction then service tax will be leviable @ 25% of 12.36% i.e 3.09%, if carpet area is less than 2000 sq ft and total consideration is less than Rs 1 crore. But if carpet area or amount is more than as mentioned above then ser tax will be 30% of 12.36% i.e. 3.708%

If entire amount is paid after issuance of completion certificate then no service tax is leviable.

Thanks and Regards,
Siddharth Bumb

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now