Santosh Kumar (Advocate)

Advocate Santosh KumarSingle Rate of Abatement for Construction of Complex Services wef 1st April, 2016

It seems that the Government is not quite sure when it comes to determine the percentage of exemption/abatement for Construction of a complex, building, civil structure etc. The Government on 20th June, 2012, introduced the abatement Notification No. 26/2012- Service Tax and announce that w. e. f. 1st July, all services with regard to Construction of a complex, building, civil structure etc. would enjoy abatement/exemption of 75%. In another words, service tax would be charged on the 25% value of such services.

But after that, the Government has made another three attempts to fix the correct percentage by amending the Notification. Latest of them is Notification No. 8/2016-ST dated 1st March, 2016. Vide this Notification, the percentage of abatement with regard to the value for calculation of amount of service tax on all type of construction of a complex, building, civil structure etc. have been fixed @ 70% wef 1st April, 2016.

Relevant portions of the various notifications fixing the amount of percentage and conditions for availing abatement/exemption are as follow:–

Sl. No.Description of taxable
service
PercentageConditions
WEF 1st July, 2012[ Notification No. 26/2012- Service Tax, 20th June, 2012]
12.Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority25(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii)The value of land is included in the amount charged from the service receiver.

Explanation. –

For the purposes of exemption at Serial number 12 –

The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

WEF 1st March, 2013 [Notification No. 2/2013 – Service Tax, 1st March, 2013]
12. Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority,- (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) The value of land is included in the amount charged from the service receiver.”.

(i)             for residential unit having carpet area upto 2000 square feet or where the amount charged is less than rupees one crore;25
(ii)           for other than the (i) above.30
WEF 8th May, 2013 [Notification No.9/2013 – Service Tax, 8th May, 2013]
12. Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entire consideration is received after issuance of completion certificate by the competent authority,- (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) The value of land is included in the amount charged from the service receiver.”.

 (a) for a residential unit satisfying both the following conditions, namely:–

(i) the carpet area of the unit is less than 2000 square feet; and

(ii) the amount charged for the unit is less than rupees one crore;

 25
(b) for other than the (a) above.30
WEF 1st April, 2016 [Notification No.8/2016 – Service Tax, 1st March, 2016]
12

Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority

 

30

(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The value of land is included in the amount charged from the service receiver.”;

(Author is an advocate from Delhi and can be reached at inditaxsolution@yahoo.co.in)

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