SERVICE TAX ON DEVELOPMENT AGREEMENT

[RAVI SONI]

I want to seek your valuable advice regarding chargebility of Service Tax on Development Agreement. I wan to know that a Development Agreement, unless it is for sharing of profits, Service Tax is payable by the Land Owner to the developer. Please help me in this particular point as this is a very vital point for future development agreements.

AI Summary

Service Tax Applicability on Development Agreements: Plot Development Pre-2012 Exempt; Post-2012 May Be Works Contract. A query was raised regarding the applicability of service tax on development agreements, specifically whether the landowner must pay service tax to the developer unless the agreement involves profit sharing. The response clarified that if the agreement involves plot development, prior to July 1, 2012, there was no specific category for service tax. Post-July 1, 2012, it could be considered a works contract. Future agreements for infrastructure development, such as roads or utilities for municipalities, might qualify for a mega exemption, while other developments could be taxable, depending on the agreement's terms and bifurcation.