Analysis of construction of complex service- old & new abate

Analysis of Construction of Complex Service- Old & New abatement Notification

Notification No. 1/2006 dated 1st March, 2006 specified certain percentage of the gross amount charged by such service provider for providing the taxable service as the taxable service.

The said notification (as amended from time to time) has specified the taxable portion being 33% where value of land is not included (25% in case value of land is also included) in the gross amount charged on the following conditions-

1. The CENVAT credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing such taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004

2. The service provider has not availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2003-Service Tax, dated the 20th June, 2003[G.S.R. 503 (E), dated the 20^th June, 2003].

Notification No. 26/2012 dated 20^th June, 2012(W.E.F. 01/07/2012) has also specified certain percentage 25% of the gross amount charged by such service provider for providing the taxable service as the taxable service if the value of land is included in the amount charged from the service receiver on the following conditions-

1. CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

2. The value of land is included in the amount charged from the service receiver.

Analysis:-

It can be seen from the above two notifications that from the 01^st July 2012, Cenvat Credit of duty paid on Capital Goods and Service tax paid on input service used for providing such taxable service can be taken under the provisions of the CENVAT Credit Rules, 2004.

This would great benefit to builders and developers.

Thanks

CA CS Amit kedia