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FinMin : Accepts High Level Committee recommendation; Flat valuation per CBEC Circular, not Education Guide

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Finance Ministry accepts recommendation of High Level Committee i.r.o. valuation of flats handed over to land owners for levy of service tax, directs adoption of method envisaged under CBEC Circular No. 151/2/2012-ST in lieu of Education Guide 2012

According to Education Guide, value of construction service provided to land owner will be value of land when same is transferred and point of taxation must be determined accordingly; On the other hand, Circular envisages determination in terms of Sec 67(1)(iii) r/w Rule 3(a) of Service Tax (Determination of Value) Rules, 2006, i.e. equal to value of similar flats charged to other buyers

Reiterates that service tax is liable to be paid by builder / developer on ‘construction service’ involved in flats to be given to the land owner, at the time when possession or right in property of said flats is transferred to land owner by entering into a conveyance deed or similar instrument; States that Circular is in accordance with provisions relating to valuation laid down by Finance Act and Service Tax Valuation Rules, while Education Guide is purely a measure of facilitation so that all stakeholders could obtain preliminary understanding of new issues for smooth transition

Education Guide neither being “Departmental Circular” nor a manual of instructions issued by CBEC, does not command required legal backing to be binding on either side in any manner : TRU Instruction

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