Service tax on under construction apartment

Hi Gopal,

Please note the following -

1. I believe, no Service tax is required to be paid, because it seems that this an obligatory collection to be made by the builder on behalf of the buyers. Hence, this amount does not reflect the amount collected for provision of construction service. If I am not wrong, the builder would not be enjoying the benefits of such amount collected and would be merely depositing the same in an account in the name of the Co-Operative Society for future benefits.

1. Please check. Service tax is not being charged on the Corpus Fund; and I agree with this treatment.

1. No. Builder merely collects Service Tax from you and utilizes the Cenvat credit that he has paid to his contractors. It is already a cost for him to pay to the contractors and hence, he is allowed to use the benefit of set off against the service tax liability charged to you.