CENVAT CREDIT TO DEVELOPERS

[NANDKUMAR SAGWEKAR]

Our client is builder / developer and paying the service tax under category Construction of residential complex . He pays service tax after taking abatement of 75% on amounts collected from the prospective buyer. He is also availing services of other subcontractors who are registered Service tax assessees and charging service tax @12.36% in their invoices. These sub contractors are purely service providers . Entire materials is supplied by our client ( developer / builder ) . In this case whether this Builder / Developer can avail the cenvat credit on services availed for construction of residential complex. The services availed are mainly plastering, slabs , floor tiling on labour charges basis.

We require your expert opinion , on this subject

Thanks

[CA SOHRABH JINDAL]

Yes your client can take cenvat credit of input services. your client is not allowed to take cenvat of inputs.

[CA SOHRABH JINDAL]

see entry no 12 of notification no 26/2012 (as amended up to date)

[NANDKUMAR SAGWEKAR]

Thank you very much Sir for your advice

AI Summary

Cenvat credit entitlement for input services in residential construction; credit not available for developer supplied materials.
A developer engaged in construction of residential complexes who pays service tax after abatement and uses subcontracted service providers can claim Cenvat credit on input services (such as labour-based plastering, slab and tiling services) invoiced with service tax, but cannot claim Cenvat credit on physical inputs/materials supplied by the developer. This position is reflected in the notification entry cited in the advisory.