As the construction is nearing completion, the value of flat/commercial unit/shop goes up substantially. Does it mean that service tax payable will also increase?
Really, even if value (selling price) goes up, that does not mean that cost of construction has gone up to that extent. The value goes up because of demand/supply situation and customer is willing to pay higher price when there is ready possession or construction is nearing completion. In such cases, payment of service tax only on value of service will result is substantial reduction of service tax liability, instead of going in for composition scheme. Hence, it is advisable to calculate value of service and pay service tax on that @ 10.3%. This can also be justified from the fact that preferential location and development of complex has been specified as a different taxable service. Thus, any charge over and above value of construction service cannot be subjected to tax.
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