Service tax on construction of flats

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atul kumar goel (Querist)
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20 July 2015 Sir,
A partnership firm is going to construct 20 flats on a site. For the construction of first 5 flats, they decided to take advance from the customers. Remaining 15 flats will be sold after completion certificate from competent authority. Now, query is whether the firm has to pay service tax only on the sale of first 5 flats or has to pay service tax on the remaining 15 flats also.

Thanks

ADITYA

ADITYA (Expert)
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21 July 2015 if you sale flat / s after getting completion certificate, you need not to pay service tax on the same.

atul kumar goel

atul kumar goel (Querist)
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21 July 2015 Thanks,But
Whether completion certificate will be seen as completion of whole complex or completion certificate per flat or per floor will suffice the non applicability of service tax.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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24 July 2025 Here’s how service tax applies in your scenario regarding construction and sale of flats:

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### Key points:

1. **Service tax on construction of residential complex** applies **until the entire complex is completed and a completion certificate is obtained** from the competent authority.

2. **Advance received for flats before completion certificate**: Service tax is payable on the advance amount received, as this is considered a receipt for the taxable service.

3. **Sale after completion certificate**: Once the **completion certificate for the entire complex** is obtained, **service tax is no longer applicable** on further sales.

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### Regarding your question:

* **Is completion certificate per flat/floor enough to avoid service tax?**

* **No.**
The *completion certificate must be for the entire complex*, not individual flats or floors.
Only after the entire complex gets completion certificate, service tax liability on construction of complex ends.

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### Summary:

| Scenario | Service Tax Applicability |
| -------------------------------------------------------- | -------------------------------------------------------- |
| Advance received before completion certificate | Pay service tax on amount received |
| Sale after **entire complex** completion certificate | No service tax on further sales |
| Completion certificate for individual flat or floor only | Service tax still applies until full complex certificate |

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