25% or 30% Abatement applicable to Developer

[JIGAR SHAH]

With reference to the Service Tax Notification No. 09/2013 Dt. 08^th May 2013

Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entire consideration is received after issuance of completion certificate by the competent authority,-
(a) for a residential unit satisfying both the following conditions, namely:– (i) the carpet area of the unit is less than 2000 square feet; and (ii) the amount charged for the unit is less than rupees one crore;	25%
(b) for other than the (a) above.	30%

Our Client has plotting scheme and he is selling plot after developing plot area by the activity such as filling with clay the deep area up to the main road surface, soil stabilization, land reclamation work, Horizontal drilling for the passage of cables or drain pipes, making the compound wall, marking the plot area etc.

Actual size of carpet area of Plot is 2100 sq feet but as per the plan passed with competent authority residential unit can be constructed for 1000 sq feet. So as per the Service Tax Notification No. 09/2013 Dt. 08^th May 2013 which percentage of abatement is applicable (whether 25% or 30%) on selling of above mentioned Plot?

AI Summary

Developer Service Tax Abatement: 25% for Units Under 2000 Sq Ft, 30% Otherwise. Separate Agreements May Affect Rate. A query was raised regarding the applicable service tax abatement for a developer selling plots after development activities. According to Service Tax Notification No. 09/2013, a 25% abatement applies if the residential unit's carpet area is less than 2000 square feet and costs under one crore rupees; otherwise, a 30% abatement applies. The client's plot measures 2100 square feet, but the approved plan allows for a 1000 square feet residential unit. It was advised that if two separate agreements are made for the plot, a 25% abatement applies; otherwise, a 30% abatement is applicable.