Service tax on construction of Apartment block

POSTED BY Suman Swamy ON September 2, 2013 4:58 pm COMMENTS (2)

Hi, I have a case were the builder is asking me to pay ST on 40% of construction cost. now the details are below.

1. Cost of construction + carpark ( 34.85 + 2) 36.85Lakhs
2.40% of 36.85 lakhs is 14.74Lakhs, and ST is working out to 1.82Lakhs
3. Land was registered as UDS (in Chennai) so its more of a construction agreement with the builder.

Now my challenge is that 40% seems to be nowhere on the Finance website and everyplace either shows a 33% (67% is Govt.abatement) or 25%. I am not sure which one to take. please guide me on which % is to be considered for base value (25% or 33% or 40%)

Also, can i ask the builder to give me a splitup of Material and Labor?, this would essentially mean that i can pay tax only on the labor part… if that is possible, what would be the Abetement %

Best regards,

Suman Swamy

2 replies on this article “Service tax on construction of Apartment block”

  1. Reetesh Sahoo says:

    As per the amendment notifications from the service tax site, Service Tax Notfication – 09/2013 dated 8th May 2013 act or check pt 12 of Service Tax notification – 26/2012 dated 20th June 2012 act, the service tax is only 25% not 40% for a under construction apprartment, complex, building or even a civil structure.

    http://www.servicetax.gov.in/notifications/notfns-2013/st09-2013.pdf
    http://www.servicetax.gov.in/notifications/notfns-2012/st26-2012.htm

    Publish these information to your builder and force him to change it.

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