Service Tax on Developers

[Mehul Pandya]

Dear Experts,

If developer purchase a land on which he can build 15 low cost houses upto 8 Lakh rupees each. Now he is planning to enter into land sale agreement first and then he will enter into construction agreement with different house purchaser. (1) Can he get service tax exemption of a single residence house designed for use for a single family under Service Tax rules ? and (2) if purchaser is taking subsidy approved from the bank under Pradhan Mantri Awas Yojana at the time of taking loan. in this case can developer get service tax exemption ??

Thank you

AI Summary

Service tax exemption linked to PMAY requires project fit with in situ or beneficiary led categories and government permission.
Whether a developer constructing multiple low cost houses can claim a service tax exemption for single residence houses and whether purchaser subsidy under PMAY affects that exemption. An amendment to the service tax notification creates exemptions for in situ rehabilitation of existing slum dwellers and beneficiary led individual house construction under PMAY, but entitlement requires that the activity fit those categories, examination of contract terms, and obtaining permission from the central housing ministry.