| Topic : Funding & finance in construction planning and management |
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Construction Planning & Management |
Project Management ++ |
Project Management Civil |
5 more ...
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Activity:
Question posted: 03 23 2009 09:08:08 +0000,
6 answers, 1457 views, last activity
02 14 2011 06:17:54 +0000
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Serviec tax is a huge tax - cost component of a construction project...
Kindly elaborate on the following :
1. Its Impact on Cost and Project Value...?
2. Client side and Sub Contract side consequences...?
3. Which projects are service tax exmepted...?
4. so on...
Service tax has a large effect on the cost and project value. The best mode is to recover the same and pay to the authorities.
Construction of roads is not liable to service tax. However a moot point is whether it is taxable, when a commercial complex constructed also contains roads. It has been clarified in Circular No.B1/6/2005-TRU dated 27.7.2005 that if construction of road is not recognized as a separate activity in the contract for construction for building, tax is chargeable on the gross amount including the value of road construction.
Construction of roads is not liable to service tax. However a moot point is whether it is taxable, when a commercial complex constructed also contains roads. It has been clarified in Circular No.B1/6/2005-TRU dated 27.7.2005 that if construction of road is not recognized as a separate activity in the contract for construction for building, tax is chargeable on the gross amount including the value of road construction.
Charitable organisations are exempt and Construction of Residential complex having only 12 or less residential units would not be taxable.
· Residential complex constructed by an individual, which is intended for personal use as residence and is constructs by directly availing services of a construction service provider (i.e.) contractor, is not taxable. (Circular No.B1/6/2005-TRU dated 27.7.2005).
Please note that words “intended for personal use”.
Also as per explanation (a) to Sec.65(91a), “personal use” includes permitting the complex for use as residence by another person on rent or without consideration.
Nothing but one more addition of burden to common mans income.
Ultimately whatever will be tax whether vat or service, builder is not going to pay a single penny as they just surpass it to the end customer.
So it's rubbish! No one is taking care of ,"Aam aadmi".
Residential Apartments - The Service Tax & VAT really sucks the already bleeding home buyer. He/she has to pay the government by way of Registration and Stamp Duty charges. In some states this is as high as 10% of the cost. Fortunately in TN, the Registration is only on the Undivided Share (UDS) of Land and the home buyer pays 9% on the guideline value only. The building is exempted from regn. & sd for the first purchase (Builder apartment). Added to this is the ST & VAT which works out to another 4% to 5% approximately. These high taxes unnecessarily pushes up the price of the property and in many cases makes it unaffordable for the middle and lower income group persons.
Dear Mr. Prabhu,
Few things are not very clear to me on this tricky tax issues :
Tax is a means by which Government earns revenue and Service Tax is supposed to be paid by the party who gets / buys the services. Then why do all the client / employer Government departments clarify the issues on Service Taxes to their Tenderers ? Unlike Income Taxes, it should not be anybody's liability when Government department is the employer.Thanks,
- Dipak Bhattacharya
Construction projects/contracts defenilty attracts service tax if your annual turnover consisting of all contracts exeeds Rs.10 laks. You have two options either to compound or pay tax at normal rate of 10% on taxable value of contracts after adjusting CENVAT credit. If you opt for compounding you will have to pay 4% on the gross value of contract or project as the case may be. In case you do not opt for compounding, you can claim following exemptions out of your gross turnover:
1. Turnover relating to contracts/projects by Government Agencies and
2. Tornover of self construction of residential properties, here I talk about current provisions of law.
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