Paying service Tax to Building Contractor

[Asked by Guest]

Dear all

Need your help

I am a software engineer, building an Indipendent home on 1600sqft plot at Bnagalore. for this i have hired an architect who at the time of hiring did mentioned that i need to pay tax (VAT?) on the amount i pay r for the service (Architetcural fees)

Now the the contractor (he has done good work, so no questions about his quality) mentioned that i need to pay 12%< some tax on the amount i pay him ( i am giving a rate contract), so if i pay 30lakh apart from whatever he makes i need to pay 12% of that to him for his services

Is this correct, as a salried person after 30% TDS it's pain for me to pay the service tax for him, can i show it in my tax return to avail teh benefit?, he did say that he will take only some part as cash to reduce the total tax. but is their a way i can recoup that from my tax return?

Please advise

Raghu

AI Summary

Service tax on residential construction: leviable for multiple transferable single units, not for an exclusive single unit home.
Service tax applies when construction comprises multiple single residential units capable of separate transfer; it does not apply where a building is constructed exclusively as one self-contained unit for a single family. VAT is not imposed on services, so an architect's service fee should not attract VAT, though it may be subject to service tax. In practice VAT is treated as payable on the material portion of construction in the cited state, while the contractor may assess service tax on the labour component and taxpayers should check state exemptions for owner occupied single unit construction.