TaxTMI 
TaxTMI 
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.
SERVICE TAX ON DEVELOPMENT AGREEMENT
10 Apr 2014 
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Service tax on development agreements depends on agreement nature and consideration, requiring classification and possible bifurcation of taxable elements.
Service tax on a development agreement depends on the agreement's nature, consideration and subject matter. If not a profit sharing arrangement, the land owner is treated as recipient and the developer's services may attract service tax; post the regulatory date, plot development may be classifiable as a works contract. Infrastructure works transferred to sanctioning authorities may qualify for large scale exemption, while other components remain taxable, requiring bifurcation based on contractual terms and amounts. (AI Summary)
Service tax on a development agreement depends on the agreement's nature, consideration and subject matter. If not a profit sharing arrangement, the land owner is treated as recipient and the developer's services may attract service tax; post the regulatory date, plot development may be classifiable as a works contract. Infrastructure works transferred to sanctioning authorities may qualify for large scale exemption, while other components remain taxable, requiring bifurcation based on contractual terms and amounts. (AI Summary)