SERVICE TAX ON RESIDENTIAL QUARTERS

[NANDKUMAR SAGWEKAR]

DEAR ALL MEMBERS

WHETHER SERVICE TAX IS LIABLE TO PAID ON FOLLOWING ACTIVITIES .

1. SERVICE PROVIDER UNDER TAKE CONSTRUCTION OF RESIDENTIAL QUARTERS / FLATS FOR AN

    EDUCATION  TRUST WHO PROPOSE TO IMPART EDUCTION TO STUDENETS OF DEGREE COLLEGE. THE

    SAID RESIDENTIAL ACCOMODATION WILL BE USED AS A RESIDENCE BY THE TEACHERS , STUDENTS

   AND OTHER STAFF OF THE EDUCATION TRUST. THESE FLAT WILL NOT BE FOR SELLING PURPOSE.

   THE NO. OF UNITS ARE 82 IN FOUR BUILDING HAVING COMMON AREA.

 

     THANKS

     A M SHEMBEKAR

    CELL 9421187122

Service Tax is exempted as per recent Chennai Commissioinerate's decision.

[Radha Arun]

Prima facie it is taxable as construction of residential complex.

Perhaps Mr Rajan will amplify his remarks on Chennai Commissionerate decision - on what basis is it exempted?

Grounds are identical as mentioned by Mr. A M Shembekar.

Thanks

[Radha Arun]

Thanks Mr Rajan. Could you pl tell us the reasoning?

[Balasubramanian Natarajan]

Dear

It is covered by the Excklsion clause in the Definition of 'Residential Complex.

Pl  ref  calrification from CBEC F.No. 331/16/2010-TRU dated 24.05.2010

balasubramanian n

Trichy

[NANDKUMAR SAGWEKAR]

Thank  you

 

Friends for giving me a valuable reply ,

[Vijay kumar]

Dear Sir, you have not mentioned whether the said Trust is getting the complex constructed on its own land. If that be the case, the construction will be for personal use of the trust for its staff etc. and hence falls under the exclusion clause of the definition of "Residential complex" in terms of Section 65(91a) of the Finance Act 1994 and accordingly there would be no taxability. Otherwise, if you have undertaken the construction work on a land belonging to you or a third person, under a mutual or tripartite agreement, then the activity amounts to taxable service notwithstanding the fact that the end user is an Educational Trust since no such exemption is provided in the Finance Act for such users. In the latter case, it is also required to be seen whether it is a case of outright sale to the Trust after completion or construction linked payment since taxability arises only in the latter case. Board Circulars dt.1.8.2006 and 29.1.2009 would be relevant in your case. In case u need further clarification, please provide the above details.

Regards

Vijay Kumar.

[NANDKUMAR SAGWEKAR]

Dear  Sir Shri. Vijay Kumar

First of all thank you very much for detail reply. The Land is owned by the Education trust and they are constructing the

residential quarters for their staff and hostel for student. They have awarded the contract only for labour work to a Contactor @ Rs. 216 per sq. feet of built up area. The material Cement , Sand , Steel , geru , water , electricity is provided by Education trust. The contractor has to do only labour job for construction of building with the material supplied by ED. Trust.

 

Thanks

 

ANAND SHEMBEKAR

AI Summary

Residential complex exclusion may exempt trust owned staff and student housing from service tax when trust provides land and materials.
Whether service tax applies depends on arrangement and land ownership: where the educational trust owns the land and supplies materials while contracting labour only, the activity falls under the residential complex exclusion and is not taxable; where construction is on third party land or structured as a works contract, tripartite agreement, sale or construction linked payment, it is taxable. CBEC circulars provide further guidance on classification and exclusions.