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Service tax on advances

237 views 3 replies

Parveen Bansal

Taxation work

46 Points Posted on 04 June 2016

I have a Question on advances?? Suppose Mr X has Purchased a Flat which is under construction from a Construction Company Say ABC Pvt Ltd and Paid a Rs. 1000000/- as advance to the company as booking Amt. Total amount of Flat (Rs. 5000000). Now the Company has paid Service tax on this Amount as POT rules Falls when advance Recevied on Rs. 1000000. But Mr X has Paid the Balance amount of Rs. 4000000 after Completion of Construction of Flat, My question is that the Company ABC Pvt Ltd is required to pay service tax on Rs. 40 Lakh which is recevied by company after Completion of construction. (further it comes under defination of service or not as sale of immovable property)

Replies (3)

CA ABHAY GUPTA

Practice

3235 Points Posted on 04 June 2016

Dear Parveen

first of all service tax on Rs 40,00,000 will be due on the date when amount become receivable or amount received by company whichever be the earlier...

secondly if whole of th amount is received by the company after receiving the CERTIFICATE OF COMPLETION FROM THE APPROPRIATE AUTHORITY then no service tax is payable else service tax will be payable...

CA ABHAY GUPTA

Practice

3235 Points Posted on 04 June 2016

in your case since part of the amount is received by the company before completion of construction thus service tax is payable on Rs 40,00 000... the date will be earlier of following:-

1) when amount will become receivable; or
2) when amount is received by company..