Service Tax Issues under Land Pooling Agreement

[VInay garg]

 

A developer enters into land pooling agreement with the owner of the land to develop the plots for residential purpose and to sell them to the purchasers.

In consideration of the Land, provided to the developers, the owners will be given 60 % share of the developed plots. Developer will bear entire cost for developing the plots.

As per my view, there is no construction activity, there seems no service tax chargeable by the developer. 

Is there any other service tax issue either to land owners or Developers ?

Looking forward for early advice.

Regards.

[Vijay Chitte]

As on date it may not be taxable service,  but after provisions relating to negative list are made effective, these will be taxable.

[ALOK GUPTA]

The activity, mentioned by you, does not appear to fall under the construction service, prima facie. However, the in depth analysis of the agreement between deveoper & owner will only reveal the chargeability of service tax on receipt in such way. Whether It may fall under the Business Support Service or Work Contract Service or any other service, will have to be analysed..

[Views expressed are personal in nature]

AI Summary

Service tax exposure on land pooling arrangements depends on service classification and the agreement's terms. Whether developer activity under a land pooling agreement is chargeable to service tax depends on classification of the developer's receipt and obligations; it does not prima facie constitute construction service, but could fall under Business Support Service or Work Contract Service depending on agreement terms, and statutory changes such as a negative list may affect taxability.