Service Tax on Real Estate / Construction Activities – A Practical Perspective

This article aims to discuss few essential issues that require to be addressed in light to the changes brought by negative list provisions, the jeopardy created by the board’s circulars and complexity of structures adhered to in this industry. Broadly the article shall cover the aspects as mentioned hereinafter: – (Strictly relevant to real estate only)

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–         Declared Services

o   Renting

o   Works Contract

o   Construction

–         Cenvat Provisions

–         Negative List

–         Exemptions

–         Abatements / Valuation

o   Works Contract


–         Abatement/Valuation

o   Construction Industry.

–         Reverse Charge

–         Models

o   Tripartite Model

o   Joint Development Model

o  Meaning

o  Structure – A Diagrammatic Study

o  Development Rights – Implications

o  Board Circulars

  • 2009
  • 2011
  • 2012

o Case Laws

  • LCS Citymakers
  • Puravankara
  • Others

o   Practical Problems – Still Unaddressed

o   Conclusion

Declared Service

“Service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include certain activities specifically excluded from the definition. {Section 65B(44)}

o Declared service simply means deemed service. Relevant inclusions in deemed service are as under:

o Renting of immovable property

o  Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority.

o   “competent authority” means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non requirement of such certificate from such authority, from any of the following, namely:––

o  Architect registered with the Council of Architecture constituted under the Architects Act, 1972

o chartered engineer registered with the Institution of Engineers (India)

o  licensed surveyor of the respective local body of the city or town or village or development or planning authority


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PART – B to follow soon.

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Related Tags Articles, CA Ankit Gulgulia, Circulars, construction,Negative list, RealEstate, Servicetax, updates 

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