Valuation of Land in Case of Commercial Complex

[Arif Kathiria]

Dear Sir,

My Client is engage in business of Construction of Commercial Complex, Sales Agreement for shops and godowns were made during the period 01-04-2015 to 30-06-2017.

Value of Land for valuation purpose for service tax can be excluded ?

[KASTURI SETHI]

If Service Tax is paid by claiming abatement of 70% from the gross receipt (consideration) as per serial no. 12 of Notification No.26/12-ST dated 20.6.12 as amended, the value of land will be included in the gross amount charged. If abatement is not claimed, the value of land, will not form part of taxable value.

Also go through Rule 2 A of Service Tax (Determination of value) Rules, 2006 as amended from time to time up to 13.4.2016.

AI Summary

Valuation of land for service tax: inclusion depends on claiming abatement under the applicable notification. Valuation of land for service tax depends on whether the practitioner claims the abatement under the applicable notification: if the abatement is applied to gross receipts for construction-related services, the value of land is included in the gross amount charged and forms part of the taxable base; if the abatement is not claimed, the value of land does not form part of the taxable value. See Rule 2A of the Service Tax (Determination of Value) Rules, 2006 for valuation procedures.