Service tax on work contract-please suggest me
srihasa
(Querist) 23 November 2013
This query is : Resolved
Hi,
I recentely booked one villa in Hyderabad,Builder started constructiion based developement aggreement with landlord,As pr their developent aggreement builder allocated few villas to landlord, My villa is one of the villas of landlord which constructing by builder.
The aggreement value of my villa is 80Lacs,While booking, builder said to me that i need to pay the complete amount on landlord's name as it is part of landlord's share,I totally agreed on this.
Now prior registration builder is demanding me to pay SERVICE TAX & VAT as per below calculation on his name.
Agreement value 8000000
Excemption for vat
(75% of agreement value) -6000000
Applicable amount for VAT 2000000
Vat 5% 100000
Excemption for Service tax
( 60% agreement value) -4800000
Applicable amount
for service tax 3200000
Service tax 12.36% 395520
As per above calc
VAT 100000
SERVICE TAX 395520
Total 495520
Here my question is in his above caluculation he is considering total aggreeement value in calculating service tax, So my understanding as per Notification No. 26_2012-Service Tax dated 20_6_2012, He should consider only 25% of the aggreement value for service tax calculation as land value included in agreement value, But he is not at all considering my words/thoughts, He is simply saying that he will come under works contract rule, so as per work contract taxation rule i should pay service tax on 40% of agreement value, Then i said as per Notification No. 24_2012 - Service Tax, it should be 40% on works contract value not on the agreement value,I said 80 lacs is not workcontract value then He said there is no seperation of land and workcontract value, agreement value is total value , so i need to pay service tax on 40% of agreement value,
I am requesting all experts here to suggest me on this , I gone through above notifications , as per my understanding , If it is workcontract,service tax should be payable on the 40% of workcontract value and if there is no seperation of works contract & landvalue,then service tax should be payable on 25% on agreement value, Please suggest me on this.
Thanks ,
Regards,
Srihasa.
BAALASUBRAMANNYAMM
(Expert) 23 November 2013
I have read over the contents of the said Notification, which is pasted:
As per the said notification, the percentage is 25%. If not ask your builder, on what basis, he is claiming @ 40%.
12. Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority
25% (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.
(ii)The value of land is included in the amount charged from the service receiver.
R.K Nanda
(Expert) 23 November 2013
nothing more to add.
