service tax on construction building

[santosh sabat]

Please advise me whether service tax is applicable for one of my client who is making constructing buildings in the form of duplex for residential accomadation. He sold the portion of land individually to all the customers. Now he has made agreement for construction of building one-to-one basis individually.

My question is whthere service tax is chargable if so under which category?

[vasudevan unnikrishnan]

works contract service may attract,which is 4% of the gross value,and cenvat can be taken on the inputs.

[NANDKUMAR SAGWEKAR]

In your the answer is as below :

You are providing the  service to your customers. If the State VAT is applicable for your

construction work , then your services are falling under the category of works contract service.

You have to charge the WCT @ 4% on entire value of contract excluding VAT element plus 2% ED cess and 1% Shed cess , so the effective rate of service tax is 4.12% . In the works contract composition scheme , you are not entitled to take the cenvat credit on inputs,Please see the notification no. 32/2007. Kindly note that any materials are supplied to your client at free of cost to you

then the value of materials must be added in taxable value for the purpose of charging WCT service tax.

Thanks

A M SHEMBEKAR

CELL 09421187122 

[vasudevan unnikrishnan]

cenvat on capital goods and input services are available for works contract service;only cenvat on 'input materials'are not admissible..

[Guest]

Dear Sir,

This service will not attract Service tax because this service will not fall under the following category 1)Commercial Construction Service 2)Residencial Complex construction service

 

1) This will not fall commercial construction service because no motive of Profit make. this for personal use of Individuals.

2)This service not fall under residential complex this category define more than 12 houses as per your statement come to know one-one basis so definatly this will not fall under the same

so according to me there will not attract any service tax for the same

 

 

AI Summary

Works contract service: construction of individual duplexes may attract service tax where VAT applies, with limited cenvat credit. Characterisation as Works Contract Service depends on State VAT applicability; if so, the construction service is taxable as works contract with taxable value including materials supplied free by the client. Cenvat credit is available for capital goods and input services but not for input materials under the composition scheme. The activity may fall outside Commercial Construction or Residential Complex classifications when contracts are individual and produce single dwellings for personal use.