Input credit on purchase of commercial property

This query is : Resolved

CA Mayur Sojrani (Querist)
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15 February 2011 I have some querry of service tax in case of real estate developers.

As in AY 10-11 new notification was inserted and service tax is also levied on deemed construction.

Now in this case

1) Whos is liable to pay service tax ? is the builder is liable to pay from his pocket or he has to recover from the buyer of the property.

2) If service tax is recoverd from the buyer no can he availed the input credit of that.

Suppose Mr. A purchase Business Premises from builder Mr. B and B has recoverd service tax from A

now can Mr. A take the credit of servcie tax as input credit.

Rahul Singhal

Rahul Singhal (Expert)
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15 February 2011 Hello mayur,
The answer to your query is as under:
The builder is liable to pay service tax and he has the right to recover the ultimate liability of service tax from the buyer.
If the buyer is the ultimate end user of the flat, then the question of availing credit is not arise.
Hope this will clarify your query.

regards
rahul
rahulajaysinghal@gmail.com

CA Mayur Sojrani

CA Mayur Sojrani (Querist)
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16 February 2011 but the buyer has not purchase flat he has purchase a (office)- commercial property to carried down his business and is even liable to pay service tax .
Now can he set off his service tax liability with the service tax he had paid on purchase of business premises

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