Service tax on real estate

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Querist : Anonymous

Querist : Anonymous (Querist)

07 August 2011 what is abatement rate on builders? is it 67% or 75%?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 August 2011 As per the notification 1/2006 dated 01 Mar 2006, a contractor is entitled to claim abatement to the extent of 67 per cent of the value of services rendered by him, which would be exempt from tax. The balance 33% amount is considered as “service” provided, hence taxed.
However, the rate of abatement is increased to 75% vide notification 29/2010 dated 27/06/2010.
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Querist : Anonymous

Querist : Anonymous (Querist)

07 August 2011 thanks. that means now builders have to charge service tax on only 25% of booking amount and they can avail cenvat credit?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 August 2011 If abatement is availed, then cenvat credit can't be availed by the builder.

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