Service tax on under construction property

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Querist : Anonymous

Querist : Anonymous (Querist)

18 June 2012 Hi,

How is the service tax calculated in case of under construction property.
Builder takes the payment under three different heads -
1) Base Sale Price (BSP)
2) Preferred Location Charges (PLC)
3) Lease Rent (LR)
Is service tax applicable on all the three, if yes then is it charged in the same fashion?
Thanks in Advance for the reply

Dayal

Dayal (Expert)

19 June 2012 Preferred location yes specifically covered

Rent again yes, it is covered under service tax under the head renting of immovable property.

for the base rate, if the property is fully constructed then no service tax, if under construction then in the following manner:

Valuation
Principally, service tax is payable on value of taxable services.
Thus, if a service provider has proper costing records, it is permissible to deduct value of material and land (or calculate value of service on cost plus profit basis) and pay service tax on value of service @ 10.30%.
If this is not feasible, then tax is payable @ 10.30% on 25%/33% of entire value of contract including material (used by builder plus supplied free of cost by customer), but then Cenvat credit is not available, as explained below.
(a) on 33% of gross amount charged if the gross amount does not include value of land
(b) on 25% of gross amount charged if the gross amount includes value of land (Till 1-7-2010, the 25% scheme was not available. Only 33% scheme was available).

Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2012 thanks for the reply ...
Just to update you, service tax rate has been revised from 10.3% to 12.36% from 1st April, 2012.

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