Service tax on development chrg paid to builder

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AVINASH KAMBLE (Querist)
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07 December 2011 I am purchased flat from Builder, Agreement Value is Rs. 2010000 and Development Charges Rs. 67000/-. Now Builder send me Demand Letter for Service Tax @ 2.257% on Total Consideration of Rs. 2077000/-. My Query is as under

1. Service Tax is applicable for Development charges or not
2. If Yes or No Pls provide me section or link so i can send it to my builder

CMA Arif Farooqui

CMA Arif Farooqui (Expert)
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10 December 2011 me too have quarry

PUNEET GOYAL

PUNEET GOYAL (Expert)
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10 December 2011 Purchase of flat does not amount to service tax as there is no services provided by builder.Construction or related services provided by builder will attract service tax. So u have to check that whether u have simply purchased the flat or as per agreement u get the construction of flat. If u got the flat constructed then if development charges includes completion or finishing services then it will be taxable.

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