Real Estate India: Is the customer liable to pay service tax according to the latest rule by the Government of India?
Question asked by Divya k c from BangaloreUS:
Respected Mam,
My name is Divya k c, I'm basically from Kerala and I'm currently living in Bangalore. I am currently in need of a Legal consultation and support from a Real Estate expert lawyer in India who could help us with our current situation.
Myself Divya k c, my Husband Sinoj Nair who too lives here in Bangalore have bought an Appartment in Bangalore, from the Multi Group Builders.
The size of the land is 1350 sqft approximately .After registering the appartment to our individual names in late 2007 ,we singed a construction agreement with the promoter to build and deliver the house to us. We have financed the appartment through housing loans.
The builder is now close to handing over the possession of the properties and there is one issue at this point.
1) There has been around 3-4 Lakhs that's been collected by the promoter for each of these properties towards Sales & Service Taxes. This community development at the current phase has 35 plus apartments in two or three separate blocks.
a) I had already paid most of the S&S taxes to them, As per my interpretation of the recent ruling from tax department in late 2007, the buyer is not liable for Sales & Service Taxes. When I asked them about this they said it does not apply to them and I'm still responsible for all the service taxes.So could you please help us in clarifying the follwing points.
2)Are we liable to pay serivce tax according to the latest rule.If yes how much percent?
I'm really puzzled and shocked at this situation and kindly request you take me as your client and help me out.
Please let me know how can I futher reach your office and engage your office in helping me with this issue.
Thanks in advance,
Kind Regards,
Divya, Bangalore
Vatsala Answers:
Clarification
a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder/Promoter/developer/any such person) shall be liable to pay Service tax on the gross amount charged for the construction services under construction of complex service [Section 65(105)(zzzh)
b) If no other person is engaged for construction work and the builder/promoter/developer/any such person undertakes construction works on his own with out engaging the services of any other person, then in such cases,-
• Service provider & service recipient relation ship does not exist.
• Service provided is in the nature of self-supply of services.
Hence, in the absence of service provider & service recipient relation ship & the service provided are in the nature of self-supply of services, the question of providing taxable service to any person by another person does not arise. Vatsala
http://www.atoneplace.com
For more information, kindly visit at Real Estate India or Online Real Estate Video.
Respected Mam,
My name is Divya k c, I'm basically from Kerala and I'm currently living in Bangalore. I am currently in need of a Legal consultation and support from a Real Estate expert lawyer in India who could help us with our current situation.
Myself Divya k c, my Husband Sinoj Nair who too lives here in Bangalore have bought an Appartment in Bangalore, from the Multi Group Builders.
The size of the land is 1350 sqft approximately .After registering the appartment to our individual names in late 2007 ,we singed a construction agreement with the promoter to build and deliver the house to us. We have financed the appartment through housing loans.
The builder is now close to handing over the possession of the properties and there is one issue at this point.
1) There has been around 3-4 Lakhs that's been collected by the promoter for each of these properties towards Sales & Service Taxes. This community development at the current phase has 35 plus apartments in two or three separate blocks.
a) I had already paid most of the S&S taxes to them, As per my interpretation of the recent ruling from tax department in late 2007, the buyer is not liable for Sales & Service Taxes. When I asked them about this they said it does not apply to them and I'm still responsible for all the service taxes.So could you please help us in clarifying the follwing points.
2)Are we liable to pay serivce tax according to the latest rule.If yes how much percent?
I'm really puzzled and shocked at this situation and kindly request you take me as your client and help me out.
Please let me know how can I futher reach your office and engage your office in helping me with this issue.
Thanks in advance,
Kind Regards,
Divya, Bangalore
Vatsala Answers:
Clarification
a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder/Promoter/developer/any such person) shall be liable to pay Service tax on the gross amount charged for the construction services under construction of complex service [Section 65(105)(zzzh)
b) If no other person is engaged for construction work and the builder/promoter/developer/any such person undertakes construction works on his own with out engaging the services of any other person, then in such cases,-
• Service provider & service recipient relation ship does not exist.
• Service provided is in the nature of self-supply of services.
Hence, in the absence of service provider & service recipient relation ship & the service provided are in the nature of self-supply of services, the question of providing taxable service to any person by another person does not arise. Vatsala
http://www.atoneplace.com
For more information, kindly visit at Real Estate India or Online Real Estate Video.