Service tax on construction of real estate business

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2013 We have a Real estate business formed as a private limited company.A land has been purchased by Rs.40 lakhs in the company name and the construction work has been started from 01.07.2011. Construction cost of The entire project is Rs. 2.50 crores ( Excluding Land Value). The project cosists of 24 flats to be executed for customers. Out of which 8 flats to be sold by Rs.16 lakhs each, 8 flats to be sold Rs.20 lakhs and rest 8 flats to be sold 25 lakhs each.10 Garages to be sold Rs.2 lakhs each and 5 Commercial shops to be sold at Rs. 3 lakhs each and 5 commercial shops to be sold as 5 lakhs each.We have got the service tax registration on 31.12.12.
My questions are:
1) Whether we will avail 75% Abatement scheme as per new service tax rule?
2)What is the service tax liability we will charged and collect from :-
a) customers for Residential flats for 16/20/25 lakhs.
b) Customer of Commercial Shops of 2 lakhs/ 5 lakhs as the case may be.
c) Customers of Garage space.

kunal

kunal (Expert)
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29 January 2013 if you are selling these flats/shops after getting completion certificate from appropriate authority , SERVICE TAX IS NOT APPLICABLE

otherwise service tax is applicable

1) yes you can claim 75% abatement provided that :- a) The value of land is included in the amount charged from the service receiver.
b) CENVAT credit on INPUTS used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.
now builders can avail cenvat credit in respect of capital goods and input services.

2) if you are providing construction services, i.e. you are selling flats/shop/garage space , you have to charge service tax @25% from customer

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