Income tax & service tax issues

This query is : Resolved

CA SONIYA AGARWAL (Querist)
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16 January 2015 one of my uncle has his own land and he decides to built residential dwellings in it , our family also booked 3 flats there , it has been 3 years now and flat is almost completed , upon registry the flat will be handed to us , since we have insufficient fund to discharge the liability of registry the acquisition of flat is still is pending .

The question my dads put forward before me is whether any obligation of capital gain will be on uncle , how will his this income on sale of flat will be accounted and what would be the tax implications .As regard the service tax , he asked whether any service tax liability has to be borne by us since the property was booked before construction began .

@*CS Siddharth Bumb. *

@*CS Siddharth Bumb. * (Expert)
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16 January 2015 hello,
if your uncle's business is construction then no capital gain will arise.
It will be treated as business income.

Service tax : if you have paid any amount before completion of construction then service tax will be leviable @ 25% of 12.36% i.e 3.09%, if carpet area is less than 2000 sq ft and total consideration is less than Rs 1 crore. But if carpet area or amount is more than as mentioned above then ser tax will be 30% of 12.36% i.e. 3.708%

If entire amount is paid after issuance of completion certificate then no service tax is leviable.

Thanks and Regards,
Siddharth Bumb