SERVICE TAX ON RESIDENCIAL APARTMENT CONSTRUCTION

[S SHANMUGASUNDARAM]

SERVICE TAX LIABILITY ON THE BUYER FOR BUYING THE FLAT FROM THE BUILDER. FLAT BOOKED DURING MAR 10 AND 90% PAYMENT MADE. BUILDER DEMANDED THE BUYER TO PAY SERVICE TAX @ 4.12% ON THE TOTAL AMOUNT PAID - LAND COST. IS IT IN ORDER.

[Surender Gupta]

No. Payment paid before 1.7.2010 is not liable to service tax. Notification no. 36/2010 ST dated 28.6.2010 https://www.taxtmi.com/notifications?id=22921

[NANDKUMAR SAGWEKAR]

ANY PAYMENTS RECEIVED PRIOR TO 01/07/2010 ARE NOT TAXABLE YOUR BUILDER'S DEMAND IS ILLEGAL MUST BE TURNDOWN . However any payments made after 01/07/2010 but before obtaining completion certificate is taxable .In your case 90% payments are made in March 2010 , you need not require to pay the service tax on this 90% amount. ANAND SHEMBEKAR CELL NO 09209904370

AI Summary

Service tax liability on apartment purchases: pre-effective-date payments not taxable; later payments before completion certificate are taxable. Payments received by the builder prior to the notification's effective date are not taxable and demands to collect service tax on such pre-effective-date receipts are unwarranted; payments received after the effective date but before obtaining the completion certificate are taxable, making the date of receipt and the completion certificate condition the operative criteria for service tax liability.