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Service Tax on Constructional and Residential Complex

Residentional complex means any complex comprising of building or building having more than twelve residentional units,and has a common area, and also has one or more facilities or services such has park,lift parking space,community hall,common water supply,or effluent treatment system.

In the new budget finance 2010 the construction of complex service is being provided that unless the entire consideration for the property is paid after completion of construction.

The activity of construction would be deemed to be taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would charged accordingly.

Further in the current budget finance bill 2010 the abatement on the value of houe property has been increased from 67% to 75% to levy the service tax,which means service tax at the rate of 10.3% will now be levied on 25% of value of the house instead of 33% as proposed in the budget.

Following services will be taxable[edit]

Construction of new or part residential complex. Completion of finishing servies in relation to residential complex such as Glazing, plastering, floorand wall tiling, wal paper and wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acostic applications or fittings and other services.

Services related to repair, alteration, renovation, restoration, other similar services are also included. The value of service includes cost of material such as cost of cement, steel, tiles, wood etc. considering this aspect an abatement of 75% has been provided in the case of composite contracts where the gross amount charged includes the cost of material etc. this is optional. This abatement is available provided the service provider is not claiming the cenvat credit for the duty paid on the inputs or capital goods used in the contract.

If the taxable services are only completion and finishing services in relation to residential compex then the service provider is not eligible for abatement.

If the builder, promoter, developer or any such person constructs the residential complex on his own he is not liale to pay service tax, since the service provider and service recipient relationship does not exist , and the services provided in the nature of self supply of services.

However if he engages a contractor to construct the residential complex then they are liable for service tax.

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