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Service tax on booking of flats already constructed

Ritesh khurana (CA student) (175 Points)

05 December 2011

Dear all

If building is already constructed on july 2011, and booking amount is received on nov 2011.kindly advice service tax liability for the month of dec 2011 is on total BSP as the plan is construction linked and total amount is already due or just on booking amount which received.

thanks and regards

ritesh khurana

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2 Replies

Rohan (Consultant) (91 Points)
Replied 05 December 2011

Hi Ritesh,

To answer your question let me break your query into couple of segments.

1) If the Building is constructed --> do you mean that the building flat is ready for possession and the builder has received the Building Usage Certificate (BU Certificate)from the Municipal Body? If YES,
then any fresh booking made after BU Certificate issued shall not be liable for Service Tax.

(As the same would represent a Sale of Flat and NOT Construction Service Rendered)

2) If BU Certificate is not issued, and Booking is made then tax shall be only on the Booking amount for that particular month/quarter. This shall be advance for the construction services to be received as per Points of Taxation rules.

3) Tax Rate shall be 2.575% if the value of land is included / 3.399% if value of land is not included or 4.12% for Work Contract Service if VAT is included.(ie. Material)

Regards,
Rohan

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