Construction of commercial complex

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2013 Dear sir,

My client has a residential plot in joint name with another person purchased in 2005. Now they have converted the same in commercial purpose and planned to develop commercial complex on the same.

If they give entire construction work to third party to develop the same and side by side got advance money step by step from proposed customers then what will be service tax and vat applicability to the land owner as well as third party constructing the property,,?

Whether land owner is required to collect service tax from customer..?

Please help..

Annu Agarwal

Annu Agarwal (Expert)
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14 December 2013 As per my view
Firstly, the construction of complex whether residential or commercial is covered under clause (ii) of Section 66E of Declared Service.So any payment received by you(i.e the land owners) from proposed customer is leviable to service tax .Since yours is a commercial complex so the service tax shall be levied @ 30% of 12.36%(Notification 2/2013 dated 28.02.2013)
Secondly,The third party to whom you have given the entire construction work shall charge service tax under Works Contract From you and not customers.