Multi-storeyed buildings to come under the ambit of service tax

Chennai:

Now any construction with more than one dwelling unit will come under the ambit of new service tax regime that came into effect from July, according to an expert.

Delivering a presentation during the workshop on Service Tax organized by KPMG and Federation of Indian Export organizations, KPMG director Praveen William said that while a single dwelling unit will not be taxable, the building having more than single dwelling unit would taxable, which includes multi-storeyed building as well as duplex.

Earlier buildings beyond 12 apartments came under the purview of service tax.

Similarly, construction services where the money is being charged before getting the completion certificate will also be taxed, he said.

The workshop is being held to generate awareness about the new service tax regime based on a negative list of exempted services which has come into effect from July 1, 2012 and aimed at aligning the indirect taxation system to the proposed Goods and Services Tax (GST) regime.

Interestingly, renting of residential dwelling units for use as residences doesn’t fall under service tax but those that are used for commercial use will be taxable, said William.

Walter D Souza said the scope of service tax has been enhanced every year and over a period of 18 years, the list of taxable services widened.

He said service tax is the largest contributing sector to GDP and has assumed overwhelming importance for the development of Indian economy. D’Souza said service tax laws in India have moved over to a new regime governed by a negative list with effect from July 1, 2012 and the years 1994 and 2012 will go down as watershed years in service tax law – the former for introducing the law and the latter for revamping it in the negative list.