Entries from January 2009 ↓

Imposition of service tax on Builders – Clarification

Sale of Residential Houses: CBEC Clarified that – any service provided by a seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax.

Circular No. 108/02/2009

F. No. 137/12/2006-CX.4

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

New Delhi, dated 29th January 2009

 

Construction of residential complex was brought under service tax w.e.f.01.06.2005. Doubts have arisen regarding the applicability of service tax in a case where developer / builder/promoter enters into an agreement, with the ultimate owner for selling a dwelling unit in a residential complex at any stage of construction (or even prior to that) and who makes construction linked payment. The ‘Construction of Complex’ service has been defined under Section 65 (105)(zzzh) of the Finance Act as “any service provided or to be provided to any person, by any other person, in relation to construction of a complex”. The ‘Construction of Complex’ includes construction of a ‘new residential complex’. For this purpose, ‘residential complex’ means any complex of a building or buildings, having more than twelve residential units. A complex constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex intended for personal use as residence by such person has been excluded from the ambit of service tax.

2. A view has been expressed that once an agreement of sale is entered into with the buyer for a unit in a residential complex, he becomes the owner of the residential unit and subsequent activity of a builder for construction of residential unit is a service of ‘construction of residential complex’ to the customer and hence service tax would be applicable to it. A contrary view has been expressed arguing that where a buyer makes construction linked payment after entering into agreement to sell, the nature of transaction is not a service but that of a sale. Where a buyer enters into an agreement to get a fully constructed residential unit, the transaction of sale is completed only after complete construction of the residential unit. Till the completion of the construction activity, the property belongs to the builder or promoter and any service provided by him towards construction is in the nature of self service. It has also been argued that even if it is taken that service is provided to the customer, a single residential unit bought by the individual customer would not fall in the definition of ‘residential complex’ as defined for the purposes of levy of service tax and hence construction of it would not attract service tax.

3. The matter has been examined by the Board. Generally, the initial agreement between the promoters / builders / developers and the ultimate owner is in the nature of ‘agreement to sell’. Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter / builder / developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of ‘residential complex’. However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax.

4. All pending cases may be disposed of accordingly. Any decision by the Advance Ruling Authority in a specific case, which is contrary to the foregoing views, would have limited application to that case only. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned.

F. NO. 137/12/2006-CX.4

(Gautam Bhattacharya)

Commissioner (Service T

What documents should be submitted as proof of address for PAN Card of individual applicants and HUF applicants?

1. Individual and HUF Applicants who are citizens of India and located within India at the time of application for PAN:
Copy of any one of the following will serve as a proof of address:

  1. Electricity bill*
  2. Telephone bill*
  3. Depository account statement*
  4. Credit card statement*
  5. Bank account statement*
  6. Rent receipt*
  7. Employer certificate*
  8. Ration card
  9. Passport
  10. Voter’s identity card
  11. Property tax assessment order
  12. Driving license
  13. Certificate of address signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted Officer.

Note:

  • *For serial numbers 1 to 7, proof of address should not be more than six months old from the date of application.
  • Document being submitted should be in the full name of the applicant as mentioned in the PAN application.
  • In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of address.
  • In case PAN application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of address.
  • It is mandatory for individuals and HUF to mention their residential address on the PAN application and to submit valid proof of the same.

2. Citizen of India located outside India at the time of application for PAN Copy of any one of the following will serve as a proof of address:

  • Passport
  • Bank account statement in country of residence
  • NRE bank account statement**

3. Foreign Citizen located in India at the time of application for PAN
Copy of any one of the following will serve as a proof of address:

  • Passport
  • Bank account statement in India
  • Residential permit issued by the State Police Authorities
  • Registration certificate issued by the Foreigner’s Registration Officer
  • Person of Indian Origin (PIO) card issued by Government of India
  • NRE bank account statement**
  • Visa application to Indian authorities & Visa granted & appointment letter/contract from Indian Company & Certificate (in original) of address in India of applicant issued by authorized signatory of employer on employer’s letter head mentioning the PAN of the employer & copy of PAN card for the PAN mentioned in the employer’s certificate***

4. Foreign Citizen located outside India at the time of application for PAN Copy of any one of the following will serve as a proof of address:

  • Passport
  • Other National ID attested by Indian Embassy/Consulate/High Commission/Apostille
  • Bank account statement in country of residence, duly attested by Indian Embassy/High Commission / Consulate / Apostille in the country where applicant is located
  • Person of Indian Origin (PIO) card issued by Government of India
  • NRE bank account statement**

Note:

** showing at least two customer induced transactions in last six months period and duly attested by Indian Embassy / Consular office / High commission or Apostille or by the manager of the bank in which the account is held. The applicant may be a joint holder.
*** In case ‘Office Address’ is mentioned in application made by foreign citizens based in India, then it is mandatory to provide all five documents mentioned above as proof for office address.

Which documents will serve as proof of identity in case of individual applicants and HUF applicants for PAN?

1. Individual and HUF Applicants who are citizens of India and located within India at the time of application for PAN:
Copy of any one of the following will serve as a proof of identity:

  • School leaving certificate
  • Matriculation certificate
  • Degree of recognized educational institution
  • Depository account statement
  • Valid Credit card
  • Bank account statement
  • Water bill
  • Ration card
  • Property tax assessment order
  • Passport
  • Voter’s identity card
  • Driving license
  • Certificate of identity signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted Officer.

Note:

  • Document being submitted should be in the full name of the applicant as mentioned in the PAN application.
  • In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of identity.
  • In case PAN application is made on behalf of a HUF, any of above documents in respect of karta of the HUF will serve as proof of identity.

2. Citizen of India located outside India at the time of application for PAN:
Copy of passport will serve as a proof of identity

3. Foreign Citizen located in India at the time of application for PAN
Copy of passport and Copy of Person of Indian Origin (PIO) card issued by Government of India will serve as a proof of identity

4. Foreign Citizen located outside India at the time of application for PAN
Copy of any one of the following will serve as a proof of identity:

  • Passport
  • Other National ID attested by Indian Embassy/Consulate/High Commission/Apostille

Person of Indian Origin (PIO) card issued by Government of India