Liability of service tax on advance taken from public
This query is : Resolved
30 April 2013
my client has business of deposit taken from public.
on maturity say after 6 years following option is being given:
1) Either ask for refund with interest from company.
2) Or purchase plot or flat/house on specific price.
whether liability of service tax on advance taken will arise or not???
on maturity say after 6 years following option is being given:
1) Either ask for refund with interest from company.
2) Or purchase plot or flat/house on specific price.
whether liability of service tax on advance taken will arise or not???
30 April 2013
by cbec:
6.2.6 If the builder instead of receiving consideration for the sale of an apartment
receives a fixed deposit, which it converts after the completion of the building into
sales consideration, will it amount to receiving any amount before the completion of
service.
This may be a colorable device wherein the consideration for provision of construction service
is disguised as fixed deposit, which is unlikely to be returned. In any case the interest earned
by the builder on such fixed deposits will be a significant amount received prior to the
completion of the immovable property. As will form part of the consideration.
interest in such cases would be considered as part of the gross amount charged for the
provision of service and the service of construction will be taxable.
hope clear from above point
6.2.6 If the builder instead of receiving consideration for the sale of an apartment
receives a fixed deposit, which it converts after the completion of the building into
sales consideration, will it amount to receiving any amount before the completion of
service.
This may be a colorable device wherein the consideration for provision of construction service
is disguised as fixed deposit, which is unlikely to be returned. In any case the interest earned
by the builder on such fixed deposits will be a significant amount received prior to the
completion of the immovable property. As will form part of the consideration.
interest in such cases would be considered as part of the gross amount charged for the
provision of service and the service of construction will be taxable.
hope clear from above point
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