1. BACKGROUND: Services provided by the Builders/ Developers is not taxable prior 01st July 2010. It is taxable from 1st July 2010 onwards as per CBEC circular No. 108/02/2009-ST.
2. APPLICABILITY: Service tax is applicable on under construction property at the time of bookings/agreements made before the construction completes. Is the Flats/Apartments / Villas is given to land owners by a real estate company then service tax is also applicable on such unit.
3. PLACE OF PROVISION OF SERVICES:
a. As per Rule no. 05 of Place Of Provision Of Services Rules 2012, if any services provided directly in relation to immovable property including some of the specified services would be deemed to be rendered at a place where immovable property is located or intended to be located
b. In case the services are partially in taxable territory and partially in non-taxable territory, then the place of provision shall be the location in the taxable territory where the greatest proportion of service is provided as per Rule no 07. For e.g. if a service provider provides services in J& K(50%), Himachal (30%) and Punjab (20%) then its services is taxable in the Himachal Pradesh.
c. In case where the service provider and service receiver is located in the taxable territory and the immovable property is located or tend to be located in non-taxable territory then As per Rule No. 08, place of provision shall be location of the recipient of service.
4. ONE PERSON TO ANOTHER: Service provider and service receiver should be different persons. For e.g. if ABC Construction Co. construct own office then it is a self -service and not applicable to service tax.
5. 100% EXEMPTED SERVICES COVERED UNDER NOTIFICATION NO 25/2012:
a. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
(a) A civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
(c) A structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
(d) Canal, dam or other irrigation works;
(e) Pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
(f) A residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;
b. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
(a) A road, bridge, tunnel, or terminal for road transportation for use by general public;
(b) A civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;
(c A building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public;
(d) A pollution control or effluent treatment plant, except located as a part of a factory; or a structure meant for funeral, burial or cremation of deceased;
c. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-
(a) An airport, port or railways, including monorail or metro;
(b) A single residential unit otherwise than as a part of a residential complex;
(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;
(d) Post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or
(e) Mechanized food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;
6. ABATEMENT AS PROVIDED VIDE NOTIFICATION NO.26/2012:
|Description of taxable services||Taxable percentage||Abatement Percentage||Conditions|
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
(i) 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
|(b) for other than the (a) above.||30||70|
NOTE: for the purposes of exemption– 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.
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