Service tax Residential complex

Sir, I bought one Duplex from One builder in Bhubaneswar, the project consists of total 9 residential duplexes, the project was approved in the year 2010, i did the agreement for one duplex in sept 2013 after cancellation of another fellow.  The builder never told regarding Service tax while booking or after also now they asking for service tax at the time of handing over the property. What i have to do. the build up area of duplex is 2038 sq feet. and carpet area will be less than that.
Asked 10 months ago in Service Tax from BHUBANESWAR, Orissa
Dear Sir,

Service is applicable on the construction and hence it will be always charged in case of purchase of property.
Vishrut Rajesh Shah
CA, Ahmedabad
194 Answers
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Dear Sir,

Construction of Residential Complex less than 12 units was taxed first time w.e.f. 01.07.2012. Its New Levy of service tax, hence Rule 5 of Point of Taxation Rules will apply. Which provides as under:

“5. Payment of tax in case of new services.— Where a service is taxed for the first time, then,— 
(a) no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable; 
(b) no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.”.

The above rule provides that if the service tax is levied for the first time then service tax will not be applicable provided 

a) Invoice has been issued and payment has been received before the date of taxability (i.e. 01.07.2012)
OR
b) Payment is received in advance and Invoice has been issued within 14 days from the date of taxability (i.e. up to 15.07.2012)

In general the builders do not issue any invoice, in such case the payment milestone (Payment obligation date) will decide the taxability.

In your case you have done Agreement to sale in Sept. 2013 then Rule 5 will becomes applicable and you will have to pay service tax.
Praveen Maheshwari
CA, Ahmedabad
4 Answers
5.0 on 5.0
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Dear Sir,

The builder is correct in imposing the Service Tax Liability on you.

Hope this clarifies your query.

Please feel free for any further clarifications.

Thanking You.

Regards,
CA Rohit R Sharma
BCOM, CA, LLB - GEN, CERT. FAFP, CERT FAFD.
Rohit R Sharma
CA, Mumbai
719 Answers
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