Service Tax on One Time Lease Rent for Under Construction Residential Flat in a Housing Society

[Pradeep Kumar]

Builder 'ABC Ltd' engaged in real estate business.The company purchased land on lease from Local authority on 99 years lease. The company is developing Residential flats and group Housing Society on the said land and sold these residential flats in open market at following structure Basic Cost price 2000 sq. ft, PLC as applicable. One Time Lease Rent 85 sq.ft. IFMS 25 Sq. ft.

Builder is charging 12.36% Service Tax on One Time Lease Rent.

Questions 1. Whether Builder can charge Service Tax on Lease Rent for Residential Flats.

Question 2 : If yes than under what ground? Also, Is there any document available which describes clearly that Builder can charge Service Tax from Buyers on One Time Lease Rent.

Question 3: Can builder charge Service Tax on Parking Space if Parking Space is purchased separately? If yes, How much Service Charge Builder can charge?

AI Summary

Can builders charge a 12.36% service tax on one-time lease rent for under-construction flats? A discussion was initiated about the applicability of service tax on one-time lease rent for under-construction residential flats in a housing society. The builder, 'ABC Ltd,' leases land for 99 years and sells residential flats, charging a 12.36% service tax on the lease rent. The questions raised include whether the builder can charge this tax, the legal basis for it, and if service tax can be charged on separately purchased parking spaces. The response from another participant was non-specific, inviting further discussion and input to clarify the issues.