Hema Aravind (System Engineer) (32 Points)
10 August 2010My builder has told me to pay works contract service tax of about 80K rupees, computed @ 4.12%. I would like to know more about the works contract service tax and its applicability to under construction houses.
The construction of my flat started in October 2009 and has not completed yet.
Thanks in advance for the information.
ravi.
(article trainee)
(424 Points)
Replied 10 August 2010
Works Contract Service Tax will be applicable irrespective of completion of construction...
It will be calculated on service provided during the year..In your case from October to March 2010...
It will not be paid on goods transferred, on which Vat is applicable..
any other query...pls ask mam..
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8311 Points)
Replied 11 August 2010
Rasesh
(CS CWA MBA (Fin) B.Com LL.B (Spl))
(6501 Points)
Replied 14 August 2010
Suppose a builder is selling apartments (construction still on). As per the recent amendment, the builder has to pay service tax. Which schemes are available under service tax on sale of residential apartments:
1) 75% abatement
2) 67% abatement
3) WCT under 4.12%
4) only 10.3% on labour
Please guide.
Rasesh
(CS CWA MBA (Fin) B.Com LL.B (Spl))
(6501 Points)
Replied 19 August 2010
Why not 67% or the 4.12%?
Ganesh
(CA)
(111 Points)
Replied 19 August 2010
Dear Hema Aravind,
I am not sure why is the builder charging WC tax on you. The service rendered by a builder (who is constructing flats/apartments) comes under Construction of Residential Complex service. With reference to charging tax on end customers, it is effective from 1st July 2010. The builder is liable to charge Service Tax on any payments you will be making on or after 1st July 2010 at the rate of 10.3% Less Abatement of 75%/67%.
Please check with your builder about this.
Thanks,
Ganesh
Rasesh
(CS CWA MBA (Fin) B.Com LL.B (Spl))
(6501 Points)
Replied 19 August 2010
Hi Ganesh,
In Gujarat, some builders have started charging WCT @ 4.12% on the development cost. Can you please look into it as to whether it is a correct stance taken by them.
Ganesh
(CA)
(111 Points)
Replied 19 August 2010
Dear Rasesh,
There are could be different ways of agreements that a buyer can enter into with the Builder
1) First to buy the land and another for a works contract with the builder to construct the house. In this case, WCT may be applicable (Refer: 2008 (10) S.T.R. 357 (A.A.R.))
2) To enter into an agreement with the builder to buy an apartment, the Sale Deed of which will be executed once the construction is complete. During the period of construction, the buyer will be making the payment towards the installments to the builder towards the relevant residential unit the buyer has booked. In this case the service will be taxed as Construction of Residential Complex Service (Refer:2008 (10) S.T.R. 341 (A.A.R.))
Hope this helps.
Thanks,
Ganesh
Excel Mastery Program
CAclubindia
