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.

AI Summary

Builder's Service Tax Demand Incorrect for Pre-July 2010 Payments, Per Notification No. 36/2010 ST. Buyer Exempt. A buyer questioned the service tax demand from a builder for a residential apartment booked in March 2010, with 90% payment made. The builder asked for a service tax at 4.12% on the total amount minus land cost. Two respondents clarified that payments made before July 1, 2010, are not subject to service tax, referencing Notification No. 36/2010 ST. They advised that the builder's demand is incorrect, as the tax applies only to payments made after July 1, 2010, and before obtaining a completion certificate. Thus, the buyer should not pay service tax on the 90% amount paid in March 2010.