Real estate - service tax on additional charges
This query is : Resolved
30 December 2012
I have my relatives who booked flats in 2 different projects. Both builders are charging different service tax on additional charges. Below is the comparison of service tax taken by both builders:
Please help me about the correct service tax on additional charges
Component Builder A Builder B
1Basic Sale Price 3.09 3.09
2Car Parking 3.09 12.36
3IFMS 12.36 NA
4Club Membership 12.36 12.36
5Lease Rent 3.09 3.09
6IDC 3.09 12.36
7EEC 3.09 12.36
8PLC 3.09 12.36
9Power BackUp 3.09 12.36
Please help me about the correct service tax on additional charges
Component Builder A Builder B
1Basic Sale Price 3.09 3.09
2Car Parking 3.09 12.36
3IFMS 12.36 NA
4Club Membership 12.36 12.36
5Lease Rent 3.09 3.09
6IDC 3.09 12.36
7EEC 3.09 12.36
8PLC 3.09 12.36
9Power BackUp 3.09 12.36
Madhukar N Hiregange
(Expert)
31 December 2012
It appears that builder A has considered all the consideration as towards the construction activity being a composite one. Whereas B has considered the other charges as separate.
Some components could be said to be part of construction such as parking, electricity, and DG power.
Some components could be said to be part of construction such as parking, electricity, and DG power.
Kaushik Vinod
(Expert)
02 January 2013
Yes the view taken by the Madhukar Sir is also supported by the CBEC Letter DOF 334/1/2008-TRU dated 29-02-2008 and Section 66F(3)(a) naturally bundled Service.
In the case of a transaction containing a major and ancillary elements, classification is to be determined based on the essential features or the dominant element of the transaction. A supply which comprises a single supply from an economic point of view should not be artificially split. The method of charging or invoicing does not in itself determine whether the service provided is a single service or multiple services. Single price normally suggests a single supply though not decisive. The real nature and substance of the transaction and not merely the form of the transaction should be the guiding factor for deciding the classification
The billing by the builder A seems to be Ok.
In the case of a transaction containing a major and ancillary elements, classification is to be determined based on the essential features or the dominant element of the transaction. A supply which comprises a single supply from an economic point of view should not be artificially split. The method of charging or invoicing does not in itself determine whether the service provided is a single service or multiple services. Single price normally suggests a single supply though not decisive. The real nature and substance of the transaction and not merely the form of the transaction should be the guiding factor for deciding the classification
The billing by the builder A seems to be Ok.
02 January 2013
Sorry but i am having difficulty in understanding. May be i am not clear about the tax
Are there any govt. rules which defines the service tax on additional charges?
Are there any govt. rules which defines the service tax on additional charges?
07 January 2013
Yes I agree with the experts
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