The budget 2013, has again tinkered the rates of service tax related to the service portion involved in sale of complex – both residential and commercial. Although the speech of the FM gave an indication that the tax is expected to be increased only on residential complex, because he feels the service element is greater in houses worth 1 crore / exceeding 2000 sq feet, but the final levy has been introduced on all types of complexes.
Unfair as it seems! The Logic on saying that the service element is more is also not digestable.
What more the provision itself is confusingly drafted :-
1. How is the carpet area to be calculated is not clear?
2. What is included in the value of property is not clear?
and 3. Most importantly, Confusion also exists in the basic clause itself. Whether both the conditions that is value less than 1 cr and Area less than 2000 sq ft is required to be satisfied to remain at the 25% level, or even if one of the conditions is satisfied, one can remain at 25% level.
Lets wait for some more carifications ….. The basic provision looks like this
Service Tax (Applicable from April 01, 2013)
| Service Tax on 25 % of the value of transaction. | Service tax on 30% of the value of transaction. |
| Conditions:- 1. Residential property having carpet area of less than or equal to 2000 sq ft. and 2. Value shall be less than Rs 1 Crore. |
Conditions :- 1. Residential property having carpet area more than 2000 sq ft or 2. Value of that home or flat is more than Rs 1 Crore. |
However incase of commercial properties service tax is levy able on 30% of the value of transaction.