Service Tax on Construction of Residential Complex
& other Services by Builders- Important Provisions
Service Tax India
Info By – www.dwarkadhis.in
Real Estate Forum – www.dwarkadhis.in/forum
1. Service Tax has been levied by Finance Bill 2010 on construction of a residential complex by builders- Clause (II) (5)
(Annexure-A attached)
2. Service Tax has been levied by Finance Bill 2010 on PLC, EDC, IDC on construction of residential complex by builders- Clause (I) (6)
(Annexure-A attached)
3. Provisions of Finance Bill has been came into effect from 01.07.2010 vide Notification No. 24/2010-Service Tax dated 22nd June 2010
(Annexure-B attached)
4. Service Tax would be leviable @ 10.30% on the 25% value of the gross amount charged for sale of residential complex from the buyers by the builders vide Notification No. 29/2010-Service Tax dated 22nd June 2010.
(Annexure-C attached)
5. Service Tax would be leviable @ 10.30% on the full value charged towards PLC, EDC and IDC. As no exemption has been granted therefore general rate of service Tax @ 10.30% would be leviable.
6. Service Tax will be collected from the buyers on payment received on or after 1st July 2010 vide Notification No. 36/2010-Service Tax dated 28th June 2010. (Annexure-D attached)
7. Service Tax @ 10.30% on Club Membership is already applicable w.e.f. 16.06.2005 and service tax will be collected at the time of receiving of Club Membership Fees.
Annexure-B
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 22nd June, 2010
Notification No. 24/2010 – Service Tax
G.S.R. (E).- In exercise of the powers conferred by clauses (A) and (B) of section 76 of the Finance Act, 2010 (14 of 2010), the Central Government hereby appoints the 1st day of July, 2010, as the date on which the provisions of the said Act shall come into force.
[F. No. B-1/24 /2010 -TRU]
(K.S.V.V.Prasad)
Under Secretary to the Government of India
Annexure-C
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
Government of India
Ministry of Finance (Department of Revenue)
New Delhi, the 22nd June, 2010
Notification No. 29/2010 – Service Tax
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 1/2006-Service Tax, dated the 1st March, 2006, G.S.R. 115(E), dated the 1st March, 2006, with effect on and from the 1st day of July, 2010, namely :-
In the said notification, in the Table, after S. No. 7 and 10 and the entries relating thereto, the following S. No 7(a) and 10(a) and entries shall be inserted, namely:-
| (1) | (2) | (3) | (4) | (5) |
| “7(a). | (zzq) | Commercial or Industrial Construction | This exemption shall not apply in cases where the taxable services provided are only completion and finishing services in relation to building or civil structure, referred to in sub-clause (c) of clause (25b) of section 65 of the Finance Act. Explanation.- The gross amount charged shall include the value of goods and materials supplied or provided or used for providing the taxable service by the service provider. This exemption shall not apply in cases where the cost of land has been separately recovered from the buyer by the builder or his representative. | 25”; |
| “10(a). | (zzzh) | Construction of Complex | This exemption shall not apply in cases where the taxable services provided are only completion and finishing services in relation to residential complex, referred to in sub-clause (b) of clause (30a) of section 65 of the Finance Act. Explanation.- The gross amount charged shall include the value of goods and materials supplied or provided or used for providing the taxable service by the service provider. This exemption shall not apply in cases where the cost of land has been separately recovered from the buyer by the builder or his representative. | 25”. |
(K.S.V.V.Prasad)
Under Secretary to the Government of India
Note.- The principal notification No.1/2006-Service Tax , dated the 1st March 2006, was published vide number G.S.R.115(E), dated the 1st March, 2006 and last amended vide notification No.09/2010-Service Tax dated the 27th February, 2010, published vide number G.S.R.153(E), dated the 27th February 2010.
Annexure-D
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 28th June, 2010
Notification No. 36/2010 – Service Tax
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (A) of section 76 of the Finance Act, 2010 (14 of 2010) other than services referred to in clause (zzc) and (zzzz) of sub-section (105) of section 65 of the Finance Act from so much of the service tax leviable thereon under section 66 of the Finance Act as is in excess of the service tax calculated on a value which is equivalent to the amount of advance payment received before the said appointed date.
Explanation.- For the purpose of this notification,
(i) “Appointed date” means the 1st day of July, 2010;
(ii) “Advance payment” means consideration received for the said taxable services to be provided.
2. This notification shall come into force on the date of its publication in the Official Gazette.
[F. No. 334/3/2010 -TRU]
(K.S.V.V.Prasad)
Under Secretary to the Government of India
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