payment of servicetax
This query is : Resolved
27 April 2009
dear sir
payment of servicetax
liability
construction of resi.+ commercial complex
builder.orcontractor or
owner of flat, shop, office
please confirm the liability
payment of servicetax
liability
construction of resi.+ commercial complex
builder.orcontractor or
owner of flat, shop, office
please confirm the liability
28 April 2009
Please be more specific. If you want all the ifnormation you should read one of commentaries to get an idea.
09 August 2024
The liability to pay service tax on the construction of residential and commercial complexes has specific rules under the service tax regime. Here’s a detailed explanation of the liability for service tax in such cases:
### **1. **Service Tax Liability on Construction Services**
**A. **Construction of Residential Complex:**
- **Service Provider:** Under the service tax regime (before GST implementation), the liability to pay service tax on the construction of residential complexes was primarily on the builder or contractor who provided the construction service.
- **Exemptions:** The construction of residential complexes was exempt from service tax if the construction was for residential units where the carpet area was less than 60,000 square feet. This exemption was applicable under the **notification No. 1/2006-ST** and related notifications.
**B. **Construction of Commercial Complex:**
- **Service Provider:** For commercial complexes, the service tax was payable by the builder or contractor providing the construction service.
- **Taxable Service:** Service tax was levied on the construction service provided to commercial properties, including offices, shops, and other commercial spaces.
### **2. **Liability for Owners**
**A. **Residential Complexes:**
- **For Buyers of Flats:** The buyers of residential flats or units generally did not have direct liability to pay service tax. The builder or contractor was responsible for paying the service tax on the construction service provided to them.
- **Post-GST Era:** Under GST, the concept of service tax was replaced, and GST is applicable. For residential construction, the builder is liable to pay GST, and the buyers of residential units generally do not have a direct liability for GST on the construction service provided.
**B. **Commercial Complexes:**
- **For Buyers/Lessee:** If the commercial space is provided on rent or lease, the owner or lessor is responsible for collecting and paying GST on rent.
- **For Purchased Commercial Units:** Similar to residential units, the liability to pay GST on the construction service for commercial units rests with the builder or contractor. The buyer does not pay GST directly on construction services but may have to pay GST on the sale or lease of the commercial property.
### **3. **Summary of Liability**
- **Builder/Contractor:** Responsible for paying service tax (pre-GST) or GST (post-GST) on the construction of both residential and commercial properties.
- **Owner/Broker/Buyer:**
- **Residential:** No direct liability for service tax (pre-GST) or GST (post-GST) on construction services.
- **Commercial:** The responsibility for GST on rent or lease of commercial property lies with the owner/lessor. For the construction phase, the liability remains with the builder.
### **4. **Additional Notes**
- **Pre-GST Service Tax:** Prior to GST, service tax was applicable based on notifications and specific exemptions.
- **Post-GST:** Under GST, the builder/contractor must charge GST on construction services, and buyers/owners need to handle GST on rental or leasing transactions.
For precise compliance and legal obligations, you should refer to the relevant GST notifications and provisions or consult with a tax professional.
### **1. **Service Tax Liability on Construction Services**
**A. **Construction of Residential Complex:**
- **Service Provider:** Under the service tax regime (before GST implementation), the liability to pay service tax on the construction of residential complexes was primarily on the builder or contractor who provided the construction service.
- **Exemptions:** The construction of residential complexes was exempt from service tax if the construction was for residential units where the carpet area was less than 60,000 square feet. This exemption was applicable under the **notification No. 1/2006-ST** and related notifications.
**B. **Construction of Commercial Complex:**
- **Service Provider:** For commercial complexes, the service tax was payable by the builder or contractor providing the construction service.
- **Taxable Service:** Service tax was levied on the construction service provided to commercial properties, including offices, shops, and other commercial spaces.
### **2. **Liability for Owners**
**A. **Residential Complexes:**
- **For Buyers of Flats:** The buyers of residential flats or units generally did not have direct liability to pay service tax. The builder or contractor was responsible for paying the service tax on the construction service provided to them.
- **Post-GST Era:** Under GST, the concept of service tax was replaced, and GST is applicable. For residential construction, the builder is liable to pay GST, and the buyers of residential units generally do not have a direct liability for GST on the construction service provided.
**B. **Commercial Complexes:**
- **For Buyers/Lessee:** If the commercial space is provided on rent or lease, the owner or lessor is responsible for collecting and paying GST on rent.
- **For Purchased Commercial Units:** Similar to residential units, the liability to pay GST on the construction service for commercial units rests with the builder or contractor. The buyer does not pay GST directly on construction services but may have to pay GST on the sale or lease of the commercial property.
### **3. **Summary of Liability**
- **Builder/Contractor:** Responsible for paying service tax (pre-GST) or GST (post-GST) on the construction of both residential and commercial properties.
- **Owner/Broker/Buyer:**
- **Residential:** No direct liability for service tax (pre-GST) or GST (post-GST) on construction services.
- **Commercial:** The responsibility for GST on rent or lease of commercial property lies with the owner/lessor. For the construction phase, the liability remains with the builder.
### **4. **Additional Notes**
- **Pre-GST Service Tax:** Prior to GST, service tax was applicable based on notifications and specific exemptions.
- **Post-GST:** Under GST, the builder/contractor must charge GST on construction services, and buyers/owners need to handle GST on rental or leasing transactions.
For precise compliance and legal obligations, you should refer to the relevant GST notifications and provisions or consult with a tax professional.
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