Service tax on Construction of complex service
This query is : Resolved
31 December 2010
Builder constructing township wherein 50 flsta are to be made. Maps have been approved from local authority for the township projects where in size of plots, roads, park etc are marked. on such project builder is also make independent villas which are 50 in numbers. would it be covered under service tax under definition of construction of complex. Mind it that each villa is independent and will get independent Patta from loacl authority. the amenities provided like park, club house etc in the township s for use of the residents as well as public. It is property vested in local government.
01 January 2011
Builder or Contractor please clarify it first, it seems you are talking about Contractor not builder or promoter (who purchased the land and develop it)
01 January 2011
My query is in respect to builders/developers and not for contractor.
02 January 2011
Service tax will aplly due to following reasons
1. it is comprise of building ( villa above 50 )
2. It is under a coomon area ( boundry wall)
3. Some facilities are common.
1. it is comprise of building ( villa above 50 )
2. It is under a coomon area ( boundry wall)
3. Some facilities are common.
10 January 2011
The question in this query is whether such township falls under the definition of residential complex. Can it to be said "a premises".
24 July 2025
Great question! Here's the detailed take on whether your township project with 50 independent villas and common amenities falls under the **service tax definition of "Construction of Complex"**:
---
### Key facts from your scenario:
* Township with **50 independent villas**.
* Maps/layout are **approved by local authority**.
* Villas are independent and each will get **separate Patta (title deed)**.
* Amenities like park, clubhouse, etc. are common but **vested with local government**.
* Villas are **independent residential units**, not part of a single building or apartment complex.
* You are a **builder/promoter**, not a contractor.
---
### Definition of Residential Complex under Service Tax (pre-GST era):
As per Service Tax rules (and corresponding notifications), a **“residential complex”** means:
* Any complex comprising of
* (i) a building or buildings having **more than 12 residential units**; and
* (ii) a common area; and
* (iii) one or more facilities/services such as park, lift, parking space, community hall, common water supply, effluent treatment system;
* The layout of such premises is approved by an authority under the applicable law.
* **Note:** It excludes complexes built for personal use, and usually means multi-unit buildings/apartments.
---
### Application to your case:
1. **Number of units:** You have 50 villas, so this condition (more than 12 units) is met.
2. **Common area:** There is a common area (park, clubhouse) but it is vested with the **local government**, not under your ownership or control.
3. **Are these villas part of one “complex” or are they independent?**
* Villas are **independent units**, with separate Patta.
* They are **not parts of a single building or multi-storey apartment**.
* Villas with separate title deeds are generally considered independent properties, **not a complex**.
4. **Is the township a "premises"?**
* The township is a defined land area with layout approval, but since the common amenities are controlled by local government, it is **arguable whether the township itself is a complex under service tax definition**.
* Usually, residential complex means a single building or group of buildings with common ownership/control over common areas/facilities.
---
### What is the likely tax position?
* Since each villa is independent and gets separate title deeds, and common amenities are not owned/controlled by builder but by government, this is **unlikely to be considered a “residential complex” for service tax on construction of complex service**.
* Instead, the builder’s activity might be **taxable under Work Contract service**, if applicable.
* However, if you provide any facility or amenity (like club house, community hall, security, maintenance) that is part of the builder’s offering (and you charge for it), those might attract service tax under “maintenance or management of complex” service or other applicable services.
---
### Summary Table:
| Criteria | Your Township (50 villas) | Service Tax “Residential Complex” Applicability |
| -------------------------------------- | ------------------------------------------------- | --------------------------------------------------------------- |
| Number of residential units | 50 (condition met) | ✔️ Yes |
| Common area ownership/control | Owned by local govt (not builder) | ❌ No |
| Villas have separate Patta/title deeds | Yes | ❌ No (not a complex but independent units) |
| Approved layout | Yes | ✔️ Yes |
| Overall | Independent villas with govt-controlled amenities | Probably NOT a residential complex for construction service tax |
---
### Conclusion:
* **Service tax on construction of complex service may NOT apply** to your township project since the villas are independent and common amenities are not controlled by builder.
* Builder may be liable under **Work Contract service tax** on construction activities.
* If builder provides additional taxable services like maintenance/amenities, separate service tax may apply on those.
---
**Recommendation:**
Get a legal/tax opinion with exact details and documents, as state/local laws and interpretations can vary. Also check if there are any recent circulars clarifying treatment of township projects with independent villas.
---
If you want, I can help draft a letter/questionnaire for tax authorities or provide references to relevant circulars/notifications. Would that be helpful?
---
### Key facts from your scenario:
* Township with **50 independent villas**.
* Maps/layout are **approved by local authority**.
* Villas are independent and each will get **separate Patta (title deed)**.
* Amenities like park, clubhouse, etc. are common but **vested with local government**.
* Villas are **independent residential units**, not part of a single building or apartment complex.
* You are a **builder/promoter**, not a contractor.
---
### Definition of Residential Complex under Service Tax (pre-GST era):
As per Service Tax rules (and corresponding notifications), a **“residential complex”** means:
* Any complex comprising of
* (i) a building or buildings having **more than 12 residential units**; and
* (ii) a common area; and
* (iii) one or more facilities/services such as park, lift, parking space, community hall, common water supply, effluent treatment system;
* The layout of such premises is approved by an authority under the applicable law.
* **Note:** It excludes complexes built for personal use, and usually means multi-unit buildings/apartments.
---
### Application to your case:
1. **Number of units:** You have 50 villas, so this condition (more than 12 units) is met.
2. **Common area:** There is a common area (park, clubhouse) but it is vested with the **local government**, not under your ownership or control.
3. **Are these villas part of one “complex” or are they independent?**
* Villas are **independent units**, with separate Patta.
* They are **not parts of a single building or multi-storey apartment**.
* Villas with separate title deeds are generally considered independent properties, **not a complex**.
4. **Is the township a "premises"?**
* The township is a defined land area with layout approval, but since the common amenities are controlled by local government, it is **arguable whether the township itself is a complex under service tax definition**.
* Usually, residential complex means a single building or group of buildings with common ownership/control over common areas/facilities.
---
### What is the likely tax position?
* Since each villa is independent and gets separate title deeds, and common amenities are not owned/controlled by builder but by government, this is **unlikely to be considered a “residential complex” for service tax on construction of complex service**.
* Instead, the builder’s activity might be **taxable under Work Contract service**, if applicable.
* However, if you provide any facility or amenity (like club house, community hall, security, maintenance) that is part of the builder’s offering (and you charge for it), those might attract service tax under “maintenance or management of complex” service or other applicable services.
---
### Summary Table:
| Criteria | Your Township (50 villas) | Service Tax “Residential Complex” Applicability |
| -------------------------------------- | ------------------------------------------------- | --------------------------------------------------------------- |
| Number of residential units | 50 (condition met) | ✔️ Yes |
| Common area ownership/control | Owned by local govt (not builder) | ❌ No |
| Villas have separate Patta/title deeds | Yes | ❌ No (not a complex but independent units) |
| Approved layout | Yes | ✔️ Yes |
| Overall | Independent villas with govt-controlled amenities | Probably NOT a residential complex for construction service tax |
---
### Conclusion:
* **Service tax on construction of complex service may NOT apply** to your township project since the villas are independent and common amenities are not controlled by builder.
* Builder may be liable under **Work Contract service tax** on construction activities.
* If builder provides additional taxable services like maintenance/amenities, separate service tax may apply on those.
---
**Recommendation:**
Get a legal/tax opinion with exact details and documents, as state/local laws and interpretations can vary. Also check if there are any recent circulars clarifying treatment of township projects with independent villas.
---
If you want, I can help draft a letter/questionnaire for tax authorities or provide references to relevant circulars/notifications. Would that be helpful?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Unable to generate and save json file for updated return
- GST payable under RCM
- How to update Transaction data in broker samco account holding after transfer shares KARVY
- Audit of F and O T/O
- Applicablity on tds
- Tax audit & Switching from Presumptive taxation
- Section 194I not showing in TDS RPU for Compnay Assessee for TDS on rent
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- Regarding TDS not deducted on rent
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
