Service Tax on Construction

[CABALRAM PANDEY]

Dear Professional Colleagues

Please guide me on the following issue:-

A builder/developer is constructing building and starting booking of flats before completion of construction, the activities flows in following manner:

01-01-2010  Date of construction started.

01-01-2011 Date of First Booking of Flat

Stage of completion        Date of construction         date of realisation

4th Floor                        01-04-2012                      31-05-2012 (50 percent of Flat Value)

10th Floor                       01-04-2014                     31-05-2014 (90 percent of Flat Value)

Possession by

Deed of conveyance        01-10-2014                       01-10-2014 (100 percent of Flat Value)

Based on the above please guide me that, what will be the point of taxation for each construction stage, as it is a continuous supply contract. 

  Thanks in advance

Balram Pandey

AI Summary

Point of taxation: construction services taxable at the earliest of invoicing, completion obligating payment, or payment receipt.
Point of taxation for construction services occurs at the earlier of invoicing, completion (when the customer is obliged to pay), or payment receipt. In continuous construction contracts, each construction stage must be evaluated against these triggers; service tax recognition may follow a completion-based stage-of-completion method per Accounting Standard 7 while income tax may use accrual accounting.