Service tax to developer of land

This query is : Resolved

SANJAY (Querist)
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08 October 2012 HELLO
MY CLIENT (HOLIDAY DEVELOPERS) IS PARTNERSHIP FIRM HAVING TWO PARTNERS.
1. MR. RAM (OWNER OF LAND)
2. MR. SHYAM
THEY HAD CONVERTED AGRI. LAND INTO NON AGRI. LAND & MADE PLOTTING SCHEME OF IT.

ALL THE PAYMENT IS RECEIVED BY HOLIDAY DEVELOPERS.

IN THAT PLOTTING SCHEME DEVELOPERS WILL MAKE APPROACH ROAD, CLUB HOUSE ETC. ON THAT LAND.

IN THIS CASE HOW TO CHARGE SERVICE TAX & ON WHAT AMOUNT ???

IS THERE ANY TAX PLANNING AVAILABLE IN THIS REGARD ???

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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08 October 2012 After completion of project the sale is of Immovable property and therefore not liable for service tax.

SANJAY

SANJAY (Querist)
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08 October 2012 THANKS FOR REPLYING SIR
I WANT TO ASK YOU FURTHER THAT

BUT HOLIDAY DEVELOPERS IS DEVELOPING THE LAND & COLLECTING FULL AMOUNT (i.e. LAND COST+ DEVELOPEMENT CHARGES) & PAYING A FIXED AMOUNT TO THE MR. RAM TOWARDS THE LAND...

THEN ALSO YOUR ANSWER WILL REMAIN SAME SIR ???

CA MOHIT GOHLYAN

CA MOHIT GOHLYAN (Expert)
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08 October 2012 Dear Mr Sanjay

M/s Holiday Developers had received all the payment before completion of there project, hence they are liable to pay service tax under construction of complex service.

They are entitled to claim exemption to the extent of 75% of the gross taxable value of services, in case cost of land forms part of value of service.

Hence they will be liable to pay service tax on 25% of the value.

Say if total value is 1,00,00,000 then service tax @ 12.36% will be payable on Rs.25,00,000 or say 3.09% on Rs 1,00,00,000

SANJAY

SANJAY (Querist)
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08 October 2012 Sir,
i want to clarify that here there is no construction of complex

its plotting scheme only

whether it change your answer ?????

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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08 October 2012 land development activity in the ambit of service tax , because on not inclusion in negative list.
hence s.t will be applicable as per service tax act,rules,

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