service tax

This query is : Resolved

PRADEEP R GUPTA (Querist)
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01 November 2010 Dear Sir,
My client Booked a shop in India Bulls Scheme on 25/05/2009 and continuied deposite fund on their demand but agreement of sale not made till date becoause company issue agreement to who is apply to loan.
I am asking that service tax liable for me or not.

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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04 November 2010 Am not clear on what is the transaction. Only taxable services are liable. All services not taxable.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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24 July 2025 Thank you for your follow-up. Let's clarify the situation based on the information and laws applicable around November 2010:

🧾 Your Situation Summarized:
Your client booked a commercial shop in Indiabulls on 25/05/2009.

They have been making payments as per the developer's demand.

No sale agreement has been signed till date.

The developer only signs the agreement for clients applying for housing/commercial loans.

You want to know if service tax is applicable to your client.

💡 Clarifying Service Tax Applicability (as per 2010 rules):
Nature of Transaction:

Your client is buying a commercial property (a shop).

The transaction is under-construction, and payment is made in installments.

This kind of arrangement is not merely a sale, but can be considered a service by the builder.

Service Tax on Construction (Post-July 1, 2010):

As of 1st July 2010, service tax became applicable on commercial or industrial construction services, if:

The property is under construction.

Payment is made before completion of construction.

This tax is applicable even if the agreement is not yet signed, as long as payment is accepted for an under-construction property.

Sale of Immovable Property – Not Taxable:

Once construction is complete, and a completion certificate is issued by the competent authority, no service tax is applicable on sale of property thereafter.

✅ Direct Answer:
Yes, your client may be liable for service tax on payments made on or after 1 July 2010, if:

The construction of the shop was still ongoing at the time of payment.

No completion certificate had been issued.

No, service tax is not applicable:

On payments made before 1 July 2010, or

If full payment was made after issuance of the completion certificate.

🧾 What You Should Do:
Ask the developer (Indiabulls) if service tax is being charged on invoices post July 2010.

Confirm date of completion certificate, if issued.

Collect receipts and payment dates for precise tax computation, if needed.

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