Service tax levied on builders & developers


I am working as an Accountant for Builders & Developers Group, i.e. with M/S V.M. Associates, Mumbai


Regarding Service tax levied on builders & Developers i have some querries which is as follows:


1. We have started our project in December 2009. We have started collecting advance      towards booking of flat from Flat parties w.e.f. from 1st January 2010 onwards.We have also started registration of flat w.e.f. from June'2011.


Now please inform us the exact implication  from which date we are liable to pay the service Tax?


As per information given to us , from our Chartered Accountant, we have been informed


that we are laible to pay the service Tax w.e.f. from 01.07.2010. We have got different


openion from 2-3 C.A's. Sir please confirm that whether the amount collected prior to the


said period is exempted from Service Tax?


You are kindly requested to give us the exact liability to pay Service Tax in this case.




For V M Associates

Manoj Asher

Our Office Contact: 28079330

Our office Email ID s_avirahi @


You Should pay service tax on Accrual or on reciept Basis as per recent amendment made in Service Tax.

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Chartered Accountant

Sale of immovable property is not liable to service tax . However, from 01-07-2010, service tax is payable if any amount has been received prior to completion certificate although the arrangement with the buyer is for sale of  flats. But construction of residential complex is taxable from 16-06-2005  onwards. Meanwhile, CBEC has clarified that tax liability arises when developer and contractor are different persons and only the contractor is liable to tax. When developer himself is constrcting the complex, it amounts to self service that is not liable to service tax. Based on this clarification most of the service providers stopped paying tax and now they are facing show cause proceeedings. Whether this clarification is legally sustainable or not , we have to wait for judicial pronouncements. Hence it is advisable to pay tax under protest.

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I have purchased a flat of Rs. 15.00 Lac in Oct'11. But the builder have not charged any service tax at the time of payment or registry. Is it possible that builder can charge me service tax after one year.





Dear Abhilash,

If the flat which you purchased was ready then no Service tax is applicable.



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