Service Tax on Real Estate.
This query is : Resolved
14 September 2010
Is there any exemption limit for service tax on real estate.. i heard that service tax would not be levied in case cost of house was less than 20 lakh? Please confirm the same.. Also wheter i will be liable to sales tax and service tax at the same time or only one will be applicable...i am in real estate and develop houses on contract basis. the cost of each house is less than 20 lakh..
Please guide me on the following...
thank you
Please guide me on the following...
thank you
14 September 2010
There is Real Estate Agent' Service w.e.f. 16.10.1998. If you give advice/consultancy on design, development, evaluation, maintenance, acquisition, management of Real Estate, you are liable for service. There is SSI exemption for Rs. 10 lakhs for advice/consultancy charges. Department has clarified that activity of actual construction of any building, carried out by builders/developers does not attract service tax within the meaning of Real Estate agent.
But If you construct building or buildings having more than twelve residential units (flats) you are liable for service tax under Construction of Residential complex services. There is 75% abatement from gross receipt (if cost of materials included)
But If you construct building or buildings having more than twelve residential units (flats) you are liable for service tax under Construction of Residential complex services. There is 75% abatement from gross receipt (if cost of materials included)
14 September 2010
thank you..
what about applicability of Sales tax??
Is there any exemption limit as regards cost of house being less than 20 lakhs
what about applicability of Sales tax??
Is there any exemption limit as regards cost of house being less than 20 lakhs
14 September 2010
thank you..
what about applicability of Sales tax??
Is there any exemption limit as regards cost of house being less than 20 lakhs
what about applicability of Sales tax??
Is there any exemption limit as regards cost of house being less than 20 lakhs
24 July 2025
Here’s a clear breakdown on **service tax and sales tax applicability in real estate** based on your questions:
---
### 1. **Service Tax on Real Estate**
* **No specific exemption limit like Rs. 20 lakhs for service tax.**
* Service tax is **applicable if you are providing “Construction of Residential Complex” service** as per the Finance Act and related notifications.
* If the project involves constructing buildings with **more than 12 residential units (flats)**, service tax applies on the **gross amount charged**, but with **75% abatement on value of materials**, so tax is effectively on 25% of the contract value.
* If you are only a **real estate agent** providing brokerage, consultancy, or advisory services, then service tax applies on your fees/commission, but **not on actual construction** by builders.
* Small-scale exemption limit applies only to **service providers like agents** (approx Rs. 10 lakhs threshold under small service provider scheme).
* Builders who construct buildings (more than 12 flats) **must pay service tax regardless of value**.
---
### 2. **Sales Tax (now GST for most states, but earlier VAT/Sales Tax)**
* Sale of immovable property (like houses/flats) is generally **exempt from sales tax or VAT**.
* However, **sale of building materials, goods used in construction, or commercial property** may attract sales tax/VAT.
* States may vary in their specific rules.
* Sales tax is generally **not levied on sale of completed residential houses**.
---
### 3. **Is there any exemption if cost of house is less than Rs. 20 lakhs?**
* For **service tax on construction service**, there is **no exemption based on value**.
* You pay service tax if project qualifies (more than 12 flats, construction service provided).
* For agents or consultants, small service provider exemption applies if turnover below Rs. 10 lakhs (not Rs. 20 lakhs).
* For sales tax, residential property sale is generally exempt regardless of price.
---
### Summary:
| Aspect | Service Tax | Sales Tax / VAT |
| ---------------------------- | ------------------------------------ | ---------------------------------- |
| Construction of >12 flats | Taxable, no exemption limit on price | Usually exempt on sale of property |
| Real estate agent/consultant | Taxable if turnover > Rs.10 lakhs | N/A |
| Sale of residential house | N/A | Usually exempt |
---
If you want, I can help you check the latest rules (now GST applies), but based on your 2010 query, above holds.
Would you like a quick note on how this changed post-GST rollout?
---
### 1. **Service Tax on Real Estate**
* **No specific exemption limit like Rs. 20 lakhs for service tax.**
* Service tax is **applicable if you are providing “Construction of Residential Complex” service** as per the Finance Act and related notifications.
* If the project involves constructing buildings with **more than 12 residential units (flats)**, service tax applies on the **gross amount charged**, but with **75% abatement on value of materials**, so tax is effectively on 25% of the contract value.
* If you are only a **real estate agent** providing brokerage, consultancy, or advisory services, then service tax applies on your fees/commission, but **not on actual construction** by builders.
* Small-scale exemption limit applies only to **service providers like agents** (approx Rs. 10 lakhs threshold under small service provider scheme).
* Builders who construct buildings (more than 12 flats) **must pay service tax regardless of value**.
---
### 2. **Sales Tax (now GST for most states, but earlier VAT/Sales Tax)**
* Sale of immovable property (like houses/flats) is generally **exempt from sales tax or VAT**.
* However, **sale of building materials, goods used in construction, or commercial property** may attract sales tax/VAT.
* States may vary in their specific rules.
* Sales tax is generally **not levied on sale of completed residential houses**.
---
### 3. **Is there any exemption if cost of house is less than Rs. 20 lakhs?**
* For **service tax on construction service**, there is **no exemption based on value**.
* You pay service tax if project qualifies (more than 12 flats, construction service provided).
* For agents or consultants, small service provider exemption applies if turnover below Rs. 10 lakhs (not Rs. 20 lakhs).
* For sales tax, residential property sale is generally exempt regardless of price.
---
### Summary:
| Aspect | Service Tax | Sales Tax / VAT |
| ---------------------------- | ------------------------------------ | ---------------------------------- |
| Construction of >12 flats | Taxable, no exemption limit on price | Usually exempt on sale of property |
| Real estate agent/consultant | Taxable if turnover > Rs.10 lakhs | N/A |
| Sale of residential house | N/A | Usually exempt |
---
If you want, I can help you check the latest rules (now GST applies), but based on your 2010 query, above holds.
Would you like a quick note on how this changed post-GST rollout?
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