Service tax

Queries 448 views 3 replies

chandrasekhar.V

Manager-Accounts

56 Points Joined June 2011

Dear All,

Pls give the advice on following 4 questions.

We are XYZ Constructions , undergoing business of Construction of Residential Apartments registered under Service tax, at what rate we have to collect service tax from Customers 10.3% or 4.12% ?

Whether we have charge service tax on Construction cost incurred or Collections from customers?

We started Construction of a Residential Flat project in the year of 2007 and completed in the year of 2011 as per attached circular Service Tax Circular service tax not charges on the revenue earned before 01.07.2010 and taxable from 01.07.2010 advice us on this , shall we go with this concept ?

If the above concept is followed if the total cost of the project is Rs.100/- based on the percentage of completion work done up to 01.07.2010 is 85% and balance 15% done after 01.07.2010 , so the 15% of the completed portion is taxable ? kindly advice

Replies (3)

CA Unnikrishnan Nair N

Chartered Accountant

2083 Points Joined February 2011

If registered under works conatrct service and composition has been opted, rate of taxis 4.12% of gross value of flats. If registered under residential complex, you can opt abtement and pay tax @ 10.3% on 1/3rd of gross value of flats excluding land value. Tax on residential complex is in force since 2005. Certain clarification of CBEC has created confusion and many service providers abstained from payment of tax. To overcome this confusion amendment has been effected w.e.f.01-07-2010. as per the amendment, if any money has been received prior to competion certificate, ST liability arises irrespective of the mode of agreement with the ultimate buyer. ie. eventhough it is agreement to sell the property, tax will be applicable.