Read on and decide for yourself

Construction of residential complex was brought under service tax w.e.f.01.06.2005. Doubts have arisen regarding the applicability of service tax in a case where developer / builder/promoter enters into an agreement, with the ultimate owner for selling a dwelling unit in a residential complex at any stage of construction (or even prior to that) and who makes construction linked payment. The ‘Construction of Complex’ service has been defined under Section 65 (105)(zzzh) of the Finance Act as “any service provided or to be provided to any person, by any other person, in relation to construction of a complex”. The ‘Construction of Complex’ includes construction of a ‘new residential complex’. For this purpose, ‘residential complex’ means any complex of a building or buildings, having more than twelve residential units. A complex constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex intended for personal use as residence by such person has been excluded from the ambit of service tax.

2. A view has been expressed that once an agreement of sale is entered into with the buyer for a unit in a residential complex, he becomes the owner of the residential unit and subsequent activity of a builder for construction of residential unit is a service of ‘construction of residential complex’ to the customer and hence service tax would be applicable to it. A contrary view has been expressed arguing that where a buyer makes construction linked payment after entering into agreement to sell, the nature of transaction is not a service but that of a sale. Where a buyer enters into an agreement to get a fully constructed residential unit, the transaction of sale is completed only after complete construction of the residential unit. Till the completion of the construction activity, the property belongs to the builder or promoter and any service provided by him towards construction is in the nature of self service. It has also been argued that even if it is taken that service is provided to the customer, a single residential unit bought by the individual customer would not fall in the definition of ‘residential complex’ as defined for the purposes of levy of service tax and hence construction of it would not attract service tax.

3. The matter has been examined by the Board. Generally, the initial agreement between the promoters / builders / developers and the ultimate owner is in the nature of ‘agreement to sell’. Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter / builder / developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of ‘residential complex’. However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax.

4. All pending cases may be disposed of accordingly. Any decision by the Advance Ruling Authority in a specific case, which is contrary to the foregoing views, would have limited application to that case only. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned.

(Gautam Bhattacharya)
Commissioner (Service Tax)

CBEC, New Delh
http://www.servicetax.gov.in/st-cirmainpg.htm

Take a Look. Some of the photos are SIS Dunabe and Green park. But all the interiors are of KBA AURA. Only 16 flats in 6.5 grounds is nice. I think 3100 per sq ft final negotiated price is good.

Clicked some random pictures during recent vacations.Had a horrible time traveling via Koyembedu bridge. No idea why it takes so much time for infra development in india. Hope good sense prevails on those bridge constructor. ]]> http://www.chennaimetroblogs.com/fairsquare-kovilambakkam-aswini-amrisa-koyembedu-flyover-india-land-tech-park/feed/ 0 http://www.chennaimetroblogs.com/merry-christmas-3/ http://www.chennaimetroblogs.com/merry-christmas-3/#comments Fri, 25 Dec 2009 03:19:21 +0000 uday http://www.chennaimetroblogs.com/?p=844 WISH ALL OUR READERS MERRY CHRISTMAS AND HAPPY HOLIDAYS

Satyam scandal and financial crisis: I personally got affected by both of this. Had a rough year. All my money in stocks went to dooms. Well patients pays, i exited with a low loss on Satyam. But had a good hit on others.

What i saw, My favorite stocks like CTSH, CAT, etc was trading at $14, $29 around early this year is trading at $45,$60 now. Hmmm !!! wish i was greedy on this.

My property investments in chennai did not go down even a single rupee.It reinforces my belief that investment in good area and given a decent time, you are not going to make losses. I am repeatedly offered good price for my properties. I am never a speculator or look property as a avenue to make money. So i just hold on and believe i wont go wrong.

My dream properties are still out of my reach. I always wished to own a one floor one flat property or a stylish villa. Both are running in crores.

OMR properties took a good beating. Luckily i exited from OMR at the right time.

Saw a huge no of affordable properties in terms of low budget and low space category. I feel these properties may not be good bet for appreciation but if one wants to own a home then he/she can buy it.

Big land deals are back: 60 grounds for Rs 120 crore.TVH To Buy Part of Muthiah Land

Second sales have eased a bit across chennai.No more fancy prices for second hand homes.

My question to you. Did you benefit from the RE downturn.? Did you buy any property for a low price?. I know quite a few readers who are holding cash, do you still feel it was worth holding the cash?

I still feel, those who are investing now in stocks or property are going to reap benefits in a year or two.

Pic Source: TOI