Service tax on real estate transaction

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CA YOGESH (Querist)
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06 February 2008 A ltd is land owning company. Company recd licence for development of plot. Before development,demarcation company has entered into agreement to sell with B Ltd. for sale of 80 % plots. B Ltd. has given part consideration for this with a understanding that he can nominate any other person. After this agreement B Ltd. has entered into agreement with individual buyer for purchase of flat.

B ltd received his profit and money (which he has given to A Ltd.) and he nominate to individual buyer.

A ltd. will directly register the plot in the name of individual buyer.

Now my question is that Whether B Ltd. is liable for service tax on profit earned by him above ?

Whether he will be treated as Service Tax Agent ?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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06 February 2008 1.If the agreements are only for purchase and sale of plots, where is the question of service tax?
2. When B is not the owner of the plots, how does B enter into agreement with individual buyer? In wha capacity?

R.V.RAO

R.V.RAO (Expert)
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06 February 2008 SERVICE TAX IS LEVIED ON PROVIDING ANY TAXABLE SERVICE IN TERMS OF SERVICE TAX ACT.PL. REFER below website for details AS TO WHAT IS A TAXABLE SERVICE.THERE ARE AT PRESENT 105 TAXABLE SERVICES UNDER SERVICE TAX ACT.
www.servicetax.gov.in
B LTD AS UNDERSTOOD FROM YOUR QUERY MUST HAVE UNDERTAKEN SALE OF PLOTS WITH A POWER OF ATTORNEY FROM A LTD. TO SELL PLOTS TO BUYERS AS THE OWNER IS A LTD.
SO B LTD. WHATEVER IT EARNS IS LIABLE UNDER INCOME TAX ACT.NOT UNDER SERVICE TAX ACT.
R.V.RAO

Dayal

Dayal (Expert)
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07 February 2008 IF B IN ANY WAY DOING A SORT OF MARKETING THEN HE MAY BE COVERED UNDER SERVICE TAX UNDER BUSINESS AUXILIARY SERVICES

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