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Service tax applicability on construction of building

PRABHANJAN DESHMUKH (Student CA Final ) (24 Points)

27 January 2015

Hii frnds, I need ur guidance on following matter,

we are 14 frnds and had collectively purchased land for constructing residential complex containing 14 FLATS, one flat of each member for self residence and not for sale and we have appointed builder for constructing said building and he is charging us service tax.
So whether Builder is liable to collect service tax from us ??? Pl guide by giving ur valuable opinion according to latest provisions of service tax. And also provide notifications, circulars if any regarding same. Thank you.

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2 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (5128 Points)
Replied 16 April 2015

Registered builder under service tax authorities only is eligible to colllect service tax

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Manish K.Gandhi (Superintendent) (966 Points)
Replied 16 April 2015

The whole activity consist of two activity (i) the unincorporate body who undertake to build for flats for member by hiring contractor which is defined as Construction of Residential Complex and (ii) contractor who actually construct building this is construction service.

Your attention is drawn to Explanation 2 to definition of "Service" given at Section 65B(44) of the Finance Act'1994 as under.

Explanation 2.–– For the purposes of this Chapter,— (a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons;

Hence, it can be termed as your group and builder both providing taxable service and the same is not self-service.