Availment of abatement - Notification No. 18/2005

[SHANTI NARAIN]

Dear sir, one of our client cover under service of construction of residential complex. Doubt have arisen regarding the valuation of service tax. According to Notification No. 15/2005 dated 07.06.2005 the gross amount charged by service provider would not include the cost of land and stamp duty. Doubt is that whether only cost of land is exclude or proportion of profit on land also exclude. pls explain with the help of example land Rs.50 lacs, cost of construction Rs.150 lacs, Sale value Rs.300 lacs. also give alternate value if he avail the abatement of 33% according to Notification No. 18/2005 dated 07.06.2005

[Surender Gupta]

In my view, your question needs to be seen afresh. Where you are selling the constructed complex, where is the question of service tax. You may get the complex constructed from someone else, in that the contrator is liable to pay service tax. But, where you are the owner of land and sell the complex or flats after construction, there should not be any service tax. Kindly provide more details, if you still thinks that service tax is leviable on your activity where the facts are different as per my understanding.

AI Summary

Clarification sought on service tax valuation for residential construction under Notification Nos. 15/2005 and 18/2005. A query was raised regarding the valuation of service tax for a client involved in the construction of residential complexes, specifically about whether the cost of land and a proportion of profit on land should be excluded from the gross amount charged, as per Notification No. 15/2005. The inquirer also sought clarification on the alternate value if a 33% abatement was availed according to Notification No. 18/2005. The response suggested that if the owner sells the constructed complex, service tax should not apply, as the tax liability falls on the contractor if the construction is outsourced. Further details were requested for clarification.