Service tax on residential complex

 

Dear Colleagues

I have a question regarding taxability of service tax for residential complex in following situation

01.  Construction and Booking of residential flat commences after 01/07/2010

02.  Building completion certificate received from competent authority in August 2011.

03.  Builder has taken 70 % payment during the period July 2010 to August 2011

04.  Balance 30 % payment has been received after obtaining completion certificate.

 

Now My quarry is

Is builder is liable to pay service tax on entire 100 % payment or on only 70 % payment which he has received before obtaining completion certicate?

Give your views on this and forward me circulars and/or notification in relation to this.

Replies (1)

 

Dear Kalpesh Gohil,

          The Service tax is levied on Sale by the Builder as post amendment they have been brought under the Service Tax Net and they are required to pay the Service tax on payments received when the building is under construction. But the same is not applicable if completion certificate is obtained by the Builder. Further the Requirement to obtain Completion Certificate is however somewhat relaxed under the Service Tax (Removal of Difficulty) Order, 2010, made effective from 1.7.2010, whereby it is provided that such Certificate can be obtained either from 
a. Any Government Authority including Local Authority,

b. An Architect registered with the Council of Architecture

c. Chartered Engineer

d. Licensed surveyor of the respective local authority

          Thus as soon as the builder obtains Completion Certificate, it is termed as the building is completed and Service tax would not be applicable on payments received after Completion Certificate.

Similarly if the builder sells ready stock no Service tax is applicable. (Please read the bare text of applicability section)

https://www.chsguru.com/2012/01/service-tax-application-on-flat-sale.html

 

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