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Reg. service tax change for under construction property

13 February 2015

Dear Sir,

Regarding Service Tax change over for the under-construction property, if the value of land & the construction services provided by the builder are mentioned clearly, I think the taxable rate is @ 12.36% of the above 2 aspects. But what all aspects / items are included in the construction services provided by the builder?

Kindly clarify.

V. LAKSHMINARAYANAN

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Vikas (CA) (1135 Points)
Replied 20 February 2015

Hi,

I am afraid to tell that your understanding is not entirely correct.

The construction services generally include the value of land, materials consumed/used while construction of the building and the services in the nature of construction by way of labours, etc.

Thus, by mere fact that the value of land is separately mentioned does not warrant that the Service tax would be chargeable @ 12.36% on the total amount charged minus value of land as per agreement.

You may refer to Rule 2A of the Service Tax (Determination of Value) Rules, 2006 for your reference.