Service tax on built up area alloted (in kind) by builder to land owner

[hubert fernandes]

'A” is a land owner and “B” is a Builders/Developer. Land owners agrees and conveys land to the builders/developers vide agreement for sale, for which the builders agree to allot in kind , say 1500 square feet of built up area to the land owners. Whether the allotment of 1500 sq ft of built-up area in kind to land owners as per the proposed finance bill 2010 would be subjected to service tax under “complex construction service” and if so what shall be the valuation for discharge of such service tax liability on the 1500 sq ft allotted to land owners

AI Summary

Service Tax Applies to Land-for-Construction Deals Under 2010 Finance Bill; Awaiting Detailed Guidelines from Finance Ministry. A landowner, referred to as 'A,' entered into an agreement with a builder, 'B,' to convey land in exchange for 1500 square feet of built-up area. The query raised concerns whether this transaction would be subject to service tax under the proposed 2010 finance bill for 'complex construction service.' The response indicated that service tax would indeed apply to the allotted area. However, detailed valuation and implementation guidelines were pending, as the Ministry of Finance or CBEC was expected to provide further provisions after the bill's enactment.