Tax on finished projects not payable

And though the tax is to be paid by the service provider, that is the contractor, the cost is sought to be passed on to the builder and therefore to the consumer. There are some interesting facts you need to know.

8226; The 10.2 per cent tax is applied differently. Says Sunil Jain, joint commissioner, Service Tax, Mumbai: 8216;8216;Labour contractors will pay tax on 100 per cent of the contract value. So will finishing services, or completion services, like carpenters.

8216;8216;But if the contractor is supplying material along with labour, the tax will be applied differently. If the contractor has not claimed credit on inputs, then he will finally pay service tax only on 33 per cent of the value of the contract. And at 10.2 per cent tax rate, it will work out to about 3.4 per cent of the value.8217;8217;

8226; The notification regarding the addition of construction contracts along with another nine new services to the service tax list was issued last week. The total list of services that are taxable is now 80.

And the total service tax burden on a building project is to be shared proportionately by all new flat buyers, which should also bring down the cost. So, if builders are threatening to add a 10 per cent padding to the cost of your flat, you know what to do now.