Abatement under notification 26/2012 for developer

A ltd entered into a contract with B Ltd whereby A Ltd will develop a housing project on the land owned by B Ltd under the brand name of A Ltd.

Entire cost of the project will be met by A Ltd and it also take booking from the prospective buyers in its own name.

Upon completion B Ltd will execute the sale/coveyance deed in favour of the buyer.

B Ltd will be paid consideration in money by A Ltd for development rights.

Now my query is

1) whether the transaction between A and B is taxable under service tax

2) whether A Ltd is entitled to avail abatement of 75% under notification 26/2012. would it be denied on the ground that the land is not owned by it

CS Saju Philip

Replies (2)

1 ) Yes, booking amount received will be covered under service tax

2 ) You can take abatement 26/2012 but condition is that value of land should be inclusive in value         of house.

I want to also say that A ltd also required to pay VAT as it is work contract. it is better to form new company by A ltd & B ltd.

Thanks for the reply.

I admit that the tansaction between A Ltd and the prospective buyers are taxable service either under works contract/construction of residential complex.

My Query is with respect to the transaction between A Ltd (the Developer) and B Ltd (the Land owner)

However i want to clarify the following

1) A ltd is not providing any works contract servcie/ construction service to B Ltd

2) No part of the developed project/flat goes back to B Ltd.

3) B Ltd transfers the development rights to A Ltd

4) consideration for the same is paid by A ltd to B Ltd

Now would this transaction will be a taxable service?. if so under which category

Waitng for a reply

 

CS Saju Philip 

 

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