TMI BlogService tax to Joint venture of consturctionX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear All, Request you to provide your opinion on the below query. Facts : There is an agreement between Landowner (A) and developer (B) for construction of residential complex consisting of 20 flats. A s share 40 % i.e. 8 flats. B s share 60 % i.e. 12 flats. B is receiving consideration for 12 flats B is collecting service tax from the buyers @ 3.09%( availing the abetment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 75%)and depositing the same. A is receiving the consideration of 8 flats. Now the question is: 1) Who will collect and pay the service tax on 8 flats sold by A ? 2) Will there be any service tax liability on B towards service provided to A for construction of 8 flats ? If yes, how to calculate the amount ? 3) Suppose the developer ( B ) provides other services like pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting, flooring etc to the individual buyer s, what will be service tax liability of B ? - Reply By Rajagopalan Ranganathan - The Reply = Sir, The answer to your quries are as follows: -[ Q.1: B will pay service tax on the 8 flats given free of cost to A, the land owner. When A sells the 8 flats to independent buyers he has to pay sales tax/VAT as per the law applicable. Q.2: Yes. B is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay service tax in respect of 8 flats given free of cost to A. Value of the 8 flats is to be determined on the basis of price of comparable flats sold by B to independent buyers. If such price is not available then on the basis of cost of construction plus reasonable profit. Q.3: If painting, flooring etc forms part of the sale price of the flats no separate service tax is payable on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch activity since the same will be part and parcel of the price of flats. If the same is undertaken after sale of the flats to independent buyers, then the service provider has to pay service tax on such service. - Reply By KASTURI SETHI - The Reply = Sh.Sunil M.D. Sir, I agree with the views of Sh.Rajgopolan Ranganathan Sir. I would like to add as follows:- Reply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Q. No.2 If comparable prices are not available, Chartered Engineer's Certificate can serve the purpose of arriving at the construction cost of 8 flats. Q.No.3 If the builder provides the service of painting, flooring etc. with material separately to the sold flats, this activity will be covered under Works Contract Service and abatement of 60% from the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss receipt will be available and RCM will also be available. If such service is provided without material, it will be pure labour and pure laboiur cannot be classified under Works Contract Service. In that situation, neither RCM nor abatement will be admissible. - Reply By KASTURI SETHI - The Reply = Sir, Fool proof reply is possible only after going through terms and conditions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreement. - Reply By Ganeshan Kalyani - The Reply = Sir if the tax amount involved is substantial, which here seems to be obvious, it is suggested to appoint a consultant. You may contact the above replied experts who have got excellent knowledge and rich experience or the one in your circle. Thanks. - Service tax to Joint venture of consturction - Query Started By: - Sunil M D Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-5-2016 Service Tax - Got 4 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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