Service Tax on Property

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  1. S.L.Basu CEng MICE

    S.L.Basu CEng MICE New Member


    Before asking my query, I would like to inform that I have gone through the following link on service tax:

    I have recently purchased a flat for Rs40,00,000/- in Kolkata. The agreement was made between developer and myself on 29/11/2015. The entire building (including floor finish, doors, windows, plastering, Plaster of Paris, drainage, all supply pipelines, septic tanks, storage tanks, boundary wall, etc.) was completed more than a year back i.e. in 2014, long before I entered into agreement. The items of work which was completed after the agreement included only:-
    1. Electrical Wiring
    2. Lift installation
    3. Plumbing fixtures like basin, commode
    4. External painting of the entire building
    5. Installation of main gate

    Now, my query is since I have availed construction services for only the 5 items above and that the building was completed before that, will my service tax be computed @3.75% of 40lac or should I insist the developer to charge the service tax based on the service provided by him after the date of agreement. Technically, since I have not availed the construction service before 29th November, 2015, I guess I am not liable to pay service tax @3.75% of 40lac.

    Looking forward to your early response.

    S.L.Basu, CEng MICE
  2. Karan Batra

    Karan Batra Well-Known Member

    The Law very clearly states that Service Tax would be levied on all under construction flats.

    The above is a clear case of purchase of under construction flat and therefore the service tax would be levied on the full amount.
  3. S.L.Basu CEng MICE

    S.L.Basu CEng MICE New Member

    Hi Karan,
    First of all, thanks a lot for your prompt response. I have learnt a lot about service taxes from your earlier posts.

    In response to your reply, could you please go through the attached file I downloaded from Central Board of Excise and Customs. Clause B "Definition and Scope of Service, Section(ii)"Residential Complex" means any complex comprising of a building or buildings having more than 12 residential units. In my case, the building is a stand-alone building with no additional facilities (like swimming pool, community hall, etc.) and has 10 residential units. Hence, I guess service tax will not be applicable at all. Is my interpretation correct?

    S.L.Basu,CEng MICE

    Attached Files:

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