Is service tax for real estate if yes/. at what rate

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Querist : Anonymous

Querist : Anonymous (Querist)

08 November 2013 what kind of service tax implemented for real estate industry
at what rat if any
please replay

thank you

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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08 November 2013 In Real Estate Industry service tax is charged during the construction period. The promoter is deemed to be rendering service to the property buyer and the consideration for the service is the amount collected from buyers during the construction period. Once the Completion Certificate is procured from the Municipal authorities, the promoter ceases to render service to the buyer. All premises sold after the completion certificate date are free of service tax.

Basically there are two classes of service rendred "Construction of Residential Complex" and "Construction of commercial and industrial complexes".

Service tax is leviable as under:

(a) If the agreement for sale comprises of the value of building alone and a separate deed is registered for transfer of land - abatement of 67% of price and ST leviable on 33% @ 12.36%.

(b) If the agreement to sell is a consolidated agreement for transfer of land and buildings:
(i) If the consideration per unit is below Rs.2 Crores AND the area of the premises is less than 2000 square feet, abatement of 75% of the price and ST leviable on 25% @ 12.36%; or
(ii) If the consideration is more than Rs.2 crores and the area is more than 2000 square feet, abatement will be 70% and ST leviable on 30% @ 12.36%.

Other services offered by promoters like 'maintenance of the buildings and gardens', 'provision of club services', etc. are not part of real estate industry services and they will be subject to service tax irrespective of whether Completion Certificate has been received or not.

Querist : Anonymous

Querist : Anonymous (Querist)

08 November 2013 thank you for your suggestion

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Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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10 November 2013 You are most welcome.