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?

[Ganeshan Kalyani]

Hope your query is resolved or else we shall try to reply. You may share your views as well to enrich our knowledge. Thanks.

AI Summary

Service tax on one-time lease rent: whether a builder may levy tax from buyers of under construction residential flats. Central issue: a developer who took land on a 99 year lease is charging a service tax on a one time lease rent component included in the sale price of under construction residential flats; the query asks whether such levy may be passed to buyers, the legal basis or documents supporting this practice, and whether separately sold parking spaces attract similar tax treatment and on what tax base.