Service tax on purchase of under construction residential property

Pravin Thorat (Querist) 02 March 2012 This query is : Resolved
We have entered in to agreement with Builder in May-2010 for purchase of under construction house property at New Mumbaifor personal use.
Now our builde demends to pay service tax @ 2.575% on payments made after 1.7.2010.

I have read circular no. 151/2/2012-ST Dt. 10.02.12 and also a clarification given by taxindiaonline dt. 13.02.12 on service tax on construction service. ( By G. Natarajan, Advocate, Swamy associates)

In that circular & clarification by CBEC, there is no liability to pay service tax on purchase of under construction house property if it is purchase for personal use.

So whether we are liable to pay service tax to builder or not?

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Vineet (Expert) 02 March 2012
Service tax is very much payable on under construction property w.e.f. 1-7-2010 @2.575% on all payment made after that date.

THe earlier clarification issued in 2009 has been undone by budgetary amendment in 2010 and hence no more applicable. The said levy has also been ratified by Bombay High Court recently.