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CA Sandesh Mundra

Consult Us For Construction

Increase in Rate of Service Tax on High End Complexes - Targeting the Super Rich again

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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.


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 transactio

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CA Sandesh Mundra, Consultant – Management Audit and Indirect Taxation - Chartered Accountant, Diploma in Information System Audit, Diploma in Insurance & Risk Management , Certificate from ICAI on International Financial Reporting Standards. Actively associated with clients in the industrial construction sector since last 9 years.He possesses special skills in structuring the indirect tax component of the works contracts and as management auditor, has visited several construction sites in various states like Orissa, Rajasthan, Gujarat, Maharasthra, Madhya Pradesh etc. During the course of said visits he has been to very large industrial complexes, refineries, power plants etc


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We are Ahmedabad based professional consulting firm. We are providing various services to Construction, Real Estate and Project Companies in various areas like Indirect Taxation – Service Tax & Multi state VAT consultancy, ERP implementation, Site & Management audit, Designing Tender & other related contractual documents etc.