Service tax on construction of residential house

Considering your case in "Construction Service"...  as there are no signs of any work contract in your case

1) if single residential unit is constructed, then no service tax liability arises.... but if more then one unit is consutructed on a single piece of land and each such unit is capable of being transferred independently then service tax liability arise.

2) As Value of Land Does not form part of agreement... Abatement will not b avaiable....

   So rate of Tax = 12% + 0.36%(cess) = 12.36%

3) For Taxability crieteria refer Rule-3 of Point of Taxation Rules,2011.

the construction is not pure labour contract. It is with material.Service tax cant be 12.36%. it will be works contract. For execution of original works 40% taxable on Gross value.

Agreed  that its Works contract service as it involves transfer of property in goods used in the execution of works contract.Therefore.,40% of value is liable to service tax\ as it is ''original works"

To add with :As per Rule 2(c) of Point of taxation rules,2011 work contracts is a notified as Continous service. As per POT Rules,2011,every event where the service receiver is liable to pay a  sum of money in terms of the service contract shall be deemed as point of taxation.

Service Tax – Mega exemption notification

Notification No.  25/2012-Service Tax

New Delhi, the 20th June, 2012

14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-

(a)  an airport, port or railways, including monorail or metro;

(b)  a single residential unit otherwise than as a part of a residential complex;

(c)   low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

If it is a works contract than exemption is available in case of single residential house every year

OR once it completes taxable turnover of Rs.10,00,000/- than exemtion is withdrawn and it has to pay 40% of service tax on each & every original works

For E.g. If I construct 5 resi. house every year than how can I take benefit of the above notification.

it says exemption to single residential unit(otherwise in a complex) and not single residential unit in a year. So if one constructs 5 individual houses , he can claim exemption to all the individual houses. Otherwise, giving exemption to one single house (which house) will be a question.

Hi All, the discussion is really helpful for me to analyse the issue further. Please find the following link for a detailed analysis on construction of single residential unit which may help you 

https://www.s3solutions.in/articles-on-tax-other-subjects/realty-sector/construction-of-single-residential-unit-st-exemption-4-sep-2012/

Hi Hello,

https://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15787

Will be helpfull

thanks regards