I want your advice regarding service tax on construction.
I have owned a site. I want to construct a two storey building for commercial use.
I approached a builder. He agreed to construct the building including cement, brick, sand and other materials. He has asked me to give him service tax on the 40 per cent of the amount at 12.36%. For example if I pay Rs.50 lakh then I have to pay to the builder the service tax of Rs.2,47,200/- (i.e. 5000000 x 40/100 x 12.36/1000)
Recently, I learnt from some English news papers, the Service tax on Construction of a building is payable at 12.36 per cent on 30 per cent of the amount paid to the builder. If it is so, the service tax payable by me to the builder for my construction works out to Rs.1,85,400/- (50,00,000 x 30/100 x 12.36/100)please guide me which basis is right your advice will be of immense help to understand the position exactly.