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service tax for residentail complex

d.viswanathan (partner) (49 Points)

04 October 2010

Kindly clarify the following points with regard to application of servie tax for residential complex

1. Is the application of 10.36% is after deducting material, labour and overhead? Does it mean it is to be applied on the margin a contracts gets?. what are the records to be maintained compulsorily?

2. Is the application of 12 residential units is per complex? Here if a contractor constructs at different places less than 12 residential units, service tax is not applicable or applicable taking everything as a whole?

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2 Replies

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 05 October 2010

One complex of mnore that 12 units gets liability to be attracted.

The concept of personal use indicates that there can be no liability when the developer builds for the individual buyers. However there is a lot of confusion. If one were to avoid litgation then options are:

a. Pay ST on compostion basis on gross value 4.12% [ avail the sub contract credits + other credits on input services and capital goods]

b. If under VAT and paying VAT on x amount then pay ST on 100-x @ 10.36% Again credit of capital goods and input services would be available.

Warm Regards

Madhukar

d.viswanathan (partner) (49 Points)
Replied 05 October 2010

Dear Mr.Madukar thanks for your clarification. AS per your contention that, the liability of service tax to residential complex is based on complex definition. If a person constructs 12 units at different locations then service tax is not applicable. secondly, whether we are proper in taking the profit margin for 10.36% application after deducting material, labour and overhead.