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Whether repair/renovation of a flat is taxable

Savita (Advocate) (41 Points)

03 May 2010

"Repair, alteration, renovation.. service in relation to residential complex" is taxable as 'construction of complex
service'

In a housing society comprising of about 150 flats, one flat is to be renovated. The entire complex is certainly a
'residential complex' but renovation is of a single flat - not of the complex itself.

Will such renovation of a single flat amount to renovation 'in relation to residential complex'? Will it be taxable?

Does the situation change if transaction is classified under 'works contract' service?

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3 Replies

Sanjay Dwivedi (Advocate & Consultant) (143 Points)
Replied 13 May 2010

There are two aspects to the question:

(i) Whether it is non-taxable for the reason that it is not repair of the complex but of a single flat?

(ii) Whether it is non-taxable for the reason that the flat is for personal use of the service receipient.

It appears to me that the transaction would be non-taxable on the second ground given above.

'Construction of complex' means construction of new residential complex or a part therof. Repair/ renovation is covered by the definition as repair, alteration, renovation.. in relation to residential complex. It appears to me that 'part of residential complex' is also a residential complex.

As regards 'personal use' we may note that:

a. Construction by a person directly engaging any other person ... intended for personal use is not taxable.

b. Repair is covered within the words 'construction of complex'.

c. Therefore, repair/ renovation of a flat would not be taxable.

I would request other members to give their inputs on the issue.

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Savita (Advocate) (41 Points)
Replied 19 May 2010

Do other members hold the same view? In that case, pls see the following:

1. It was viewed that when a builder/ developer enters into agreement with a prospective buyer for construction and sale of a flat, the builder/ developer was providing a service. The current budget says that if the payment is made in advance, it would be deemed that the builder/ developer is providing service.

2. It would tantamount to directly engage the builder/ developer by such individual buyer for construction. Therefore, the activity should be covered by the exclusion clause and no service tax should be payable.

Kindly comment.