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Construction of residential complex

Nirav Worah (CHARTERED ACCOUNTANT) (396 Points)

11 November 2011

Dear Members,

Please give your valuable opininon on following issue

A, B, C, D are develpoers who have engaged a contractor for construction of residential units. Each co-owner holds less than 12 units. Whether seperate exemption of construction upto 12 units will be available to each co-owner under Construction of Residential Complex Service?

Regards,

Nirav Worah

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5 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 12 November 2011

Fact that each co-owner holds less than 12 units is not relevant. The tests namely > 12 units and common area apply to the complex . Once these are fulfilled eah co-owner and the contractor shall be liable to service tax.

1 Like

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 12 November 2011

Dear sir,

If the developer provides material to contractor for construction then in this case, what will be the implication of works contract tax/ Vat???

Regards,

Pinky Agarwal.

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 14 November 2011

If entire construction materials are supplied by developer and conrtactor carries out the work. It is a pure labor conatract in the hands of the contractor. He is liable to service tax but not liable to VAT. On the other hand, developer is liable to service tax as well as VAT. But, if developer is developing the property on his own land, without reference to any buyer, without receipt of money from any buyer and after completion of work , the property is transferred as sale of immovable property, there is no service tax liability and VAT liability.

1 Like

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 14 November 2011

thank you sir for your reply..

I have one more query, Kindly clarify the Situation..

Suppose "A" is the owner of 1/4th land and 3/4th part of land belongs to "B", B is both owner and developer of land. Now A enters into an agreement with B to make joint development of their property. In this 2 flats will belong to A and rest will be with B. For this no consideration is given by A to B. Can you please explain the situation and inplication of service tax on it??

Regards,

Pinky Agarwal.

KALYANARAMAN KUMAR (PROPRIETOR CONCERN) (30 Points)
Replied 03 March 2012

In my case , the promotor works only for construction of houses/apts and they will sell with the help of land owner and here my doubt is whose eligible for 80I a exemption for income tax and service tax liability for more than 12 houses will apply or devloper construvts 32 houses .Here more than 12 houses are coming for service tax rate . Whether 32 houses are eligible for service tax liability or 36-12=24 only eligible for service tax liability please clarify the both income tax benefits and service tax liability