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Report of the High Level Committee; recommendation regarding valuation of flats for levy of Service Tax

Service Tax - F.No.354/311/2015-TRU - Dated:- 20-1-2016 - F. No. 354/311/2015-TRU Government of India Ministry of Finance Department of Revenue (Tax Research Unit) 20th January, 2016 To, Principal Chief Commissioners of Customs and Central Excise (All) Principal Chief Commissioners of Central Excise & Service Tax (All) Principal Director Generals of Goods and Service Tax/System/CEI Director General of Audit/Tax Payer Services, Principal Commissioners/ Commissioners of Customs and Central Exc .....

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is required. It has been pointed out by the HLC that there is a divergence of view between Para 6.2.1 of the Education Guide 2012 and the CBEC Circular No. 151/2/2012-ST dated 10.2.2012 on how flats handed over to land owners are to be valued for the purpose of levy of service tax. The two views need to be reconciled. The HLC has opined that the guidelines communicated by the said Circular are more appropriate. 2. The issue has been examined. In a tri-partite construction business model, there .....

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ur of the land owner. The remaining flats are sold by the builder/developer to various buyers. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: i. from landowner, in the form of land /development rights; and ii. from other buyers, normally in the form of money. 3. According to the CBEC Education Guide on Taxation of Services, 2012 value of construction service provided to such land owner will be the value of the .....

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of these flats would be equal to the value of similar flats charged by the builder/developer from the second category of service receivers. In case the prices of flats/houses undergo a change over the period of sale (from the first sale of flat/house in the residential complex to the last sale of the flat/house), the value of similar flats as are sold nearer to the date on which land is being made available for construction should be used for arriving at the value for the purpose of tax. Service .....

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