SERVICE TAX ON UNDER CONSTRUCTION PROPERTY

This query is : Resolved

YOGESH (Querist)
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18 June 2011 I HAVE PURCHASED A PROPERTY WHICH IS STILL UNDER CONSTRUCTION. I HAVE DISBURSED THE PAYMENT IN MARCH,2011. NOW BUILDER HAS SENT A NOTICE THAT I HAVE ALSO REQUIRE TO PAY SERVICE TAX AT 2.57%.I CAME TO KNOW THAT THIS MATTER IS IN DISPUTE IN HIGH COURT. SHOULD I MAKE THE SERVICE TAX PAYMENT ?

PLEASE REPLY URGENTLY

Bhavesh Gupta

Bhavesh Gupta (Expert)
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21 June 2011 The Government has levied service tax on construction of property which is sold before full completion. However, due to abatement, the effective service tax rate comes to be 2.575%

The matter which is pending before High Court pertains to levy of service tax on renting of commercial property and not this matter. Therefore you need to make the service tax payment.

Further, PLC charges are leviable to service tax @ 10.3%