Service Tax on Builders

[Anup Kumar Grover]

Sir,

One of the Builder, taken a collaboration agreement for Rs.10 crore, completed construction of B+GF+FF+SF+TF,

Owners share was FF and rest of builder's Share. Cost of Construction Rs.8 Crore.

Thus, total cost of Builder Rs.10+8 crore= Rs.18.00 Crore. Whether Service Tax be charged as 

B+GF sold for Rs.8 Crore, = 8 X 30% X 12.36% = Rs.29.66 Lac

SF sold for Rs.6 Crore =  6 X 30% X 12.36% = Rs.22.25  Lac

TF sold for Rs.6 Crore 6 X 30% X 12.36% = Rs.22.25  Lac

If consideration received before issue of completion certificate from the proposed buyer.

 Whether it will be permissible under Law, when in Sale Deed, a segregation be made for value of proportionate land transferred and value of Construction cost on their floor trfd. Then levy Service Tax and VAT on value of cost of construction only and abatement of 60% be taken.

AI Summary

Service tax on construction and booking rights: allocation of land and construction value determines taxable service treatment.
The collaboration arrangement yields three taxable elements: the builder's construction services (taxable as works contract on the construction portion), the landowner's receipt of booking advances (taxable as declared services), and transfers by the builder treated as transfer of booking rights. Taxability for each floor depends on contractual allocation of land and construction values; alternatives include charging service tax on the construction element for the owner's floor and treating other floors as declared services or applying the abatement to derive the taxable service portion.