Works Contract Service Tax

Works Contract Service Tax will be applicable irrespective of completion of construction...

It will be calculated on service provided during the year..In your case from October to March 2010...

It will not be paid on goods transferred, on which Vat is applicable..

any other query...pls ask mam..

Suppose a builder is selling apartments (construction still on). As per the recent amendment, the builder has to pay service tax. Which schemes are available under service tax on sale of residential apartments:

1) 75% abatement

2) 67% abatement

3) WCT under 4.12%

4) only 10.3% on labour

Please guide.

75% ABATEMENT

Why not 67% or the 4.12%?

Dear Hema Aravind,

I am not sure why is the builder charging WC tax on you. The service rendered by a builder (who is constructing flats/apartments) comes under Construction of Residential Complex service. With reference to charging tax on end customers, it is effective from 1st July 2010. The builder is liable to charge Service Tax on any payments you will be making on or after 1st July 2010 at the rate of 10.3% Less Abatement of 75%/67%. 

Please check with your builder about this.

Thanks,

Ganesh

Hi Ganesh,

In Gujarat, some builders have started charging WCT @ 4.12% on the development cost. Can you please look into it as to whether it is a correct stance taken by them.

 Dear Rasesh,

There are could be different ways of agreements that a buyer can enter into with the Builder

1) First to buy the land and another for a works contract with the builder to construct the house. In this case, WCT may be applicable (Refer: 2008 (10) S.T.R. 357 (A.A.R.))

2) To enter into an agreement with the builder to buy an apartment, the Sale Deed of which will be executed once the construction is complete. During the period of construction, the buyer will be making the payment towards the installments to the builder towards the relevant residential unit the buyer has booked. In this case the service will be taxed as Construction of Residential Complex Service (Refer:2008 (10) S.T.R. 341 (A.A.R.))

Hope this helps.

Thanks,

Ganesh