Construction of residential complex

This query is : Resolved

RAVI SONI (Querist)
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27 March 2012 As per the existing law if the flats are sold after " CC " (Completion Certificate) Service Tax liability do not arise. I want to know whether there is any change in this rule in the current amendment.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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29 March 2012 Under construction Property
It should be noted that the service tax would be levied only on under construction property. A property is considered “under construction” till the builder receives a “completion certificate” from the relevant authorities. If the entire amount for the property purchase is paid after the receipt of a completion certificate, there would be no levy of the service tax.

The obligation of paying service tax is on the builder. So, you would not have to go through the hassle of paying it. It is the duty of the builder to collect this service tax from the purchaser and deposit it with the department. However, ultimately this burden would be transferred to the home buyers in the form of higher price. This provision would be applicable from 1st April, 2010.

Abatement allowed
Budget 2010 brought a rude shock to prospective home buyers. But don’t get too shocked, you won’t pay service tax on the entire amount. Abatement scheme, under notification number 1/2006 dated March 1, 2006, says that the contractor is entitled to claim abatement to the extent of 67 per cent of the value of services rendered by him. Hence the net effect of the tax could be lesser than the 3.4 per cent, since construction attracts service tax only on 33 per cent of the value. Recently Finance Minister has rolled back Service Tax to 25% of the value.