Input service credit - FOR BUILDERS

[hubert fernandes]

We are Builders / developers and provide service under declared service ie complex construction. we avail input service credit on service tax paid on input services.At the end of a particular project and after obtaining completion certificate there are some flats unsold which when sold will not attract service tax .whether the credit availed earlier on input services needs to be reversed for such unsold flats and if so under which rule or provisions OR we can fully avail such credit and utilise it for other real estate projects

AI Summary

Builders Must Reverse Cenvat Credit for Unsold Flats After Completion Certificate, Per Rule 6 of Cenvat Credit Rules. A builder queried whether input service credit on service tax should be reversed for unsold flats after obtaining a completion certificate, as these flats, when sold, do not attract service tax. The response highlighted that according to Rule 6 of the Cenvat Credit Rules, a proportionate reversal of Cenvat Credit is necessary for unsold flats. It was suggested that this reversal should occur immediately after receiving the completion certificate to avoid interest charges. The discussion also questioned whether selling unsold inventory flats constitutes an exempted service under these rules.