Construction Services - Original works - Others - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 14 Construction Services - Original works (w.e.f. 1st July, 2012) Scope of Exempt Service - Notification no. 25/2012 dated 20.06.2012 From 1.7.2012 to 31.3.2015 Services by way of construction, erection, commissioning, or installation of original works pertaining to,- ( a ) port, airport , railways, including monorail or metro; ( b ) a single residential unit otherwise than as a part of a residential complex; ( c ) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; ( d ) post-harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or ( e ) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; From 1.4.2015 to 29.2.2016 - Notification no. 06/2015 - Dated 1-3-2015 Services by way of construction, erection, commissioning, or installation of original works pertaining to,- ( a ) railways, including monorail or metro; ( b ) a single residential unit otherwise than as a part of a residential complex; ( c ) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; ( d ) post-harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or ( e ) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; From 1.3.2016 - Notification. 09/2016 - Dated 1-3-2016 Services by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, excluding monorail and metro; Explanation.-The services by way of construction, erection, commissioning or installation of original works pertaining to monorail or metro, where contracts were entered into before 1st March, 2016, on which appropriate stamp duty, was paid, shall remain exempt ( b ) a single residential unit otherwise than as a part of a residential complex; ( c ) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (ca) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under: (i) the Affordable Housing in Partnership component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (ii) any housing scheme of a State Government. ] ( d ) post-harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or ( e ) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; Amending Notes w.e.f 1.3.2016:- Services by way of construction, erection, etc., of original works pertaining to low cost houses up to a carpet area of 60 sq.m per house in a housing project approved by the competent authority under the Affordable housing in partnership component of PMAY or any housing scheme of a State Government are being exempted from service tax. Exemption to construction, erection, commissioning or installation of original works pertaining to monorail or metro (under S. No 14 of the notification No. 25/12-ST ) has been withdrawn, in respect of contracts entered into on or after 1st March 2016. Meanings and Definitions: original works means - (a) all new constructions; or (b) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable. residential complex means any complex comprising of a building or buildings, having more than one single residential unit. single residential unit means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family agricultural produce means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. (See Notification no. 25/2012 dated 20.06.2012 , effective from 01.07.2012 Notification no. 06/2015 - Dated 1-3-2015 , effective from 01.04.2015) Clarification by the Board ( Taxation Guide - Guidance Note - 7 - Exemptions dated 20.06.2012) 7.9.7 What is the service tax liability on construction of two - floor house constructed through a contractor? My contractor is demanding service tax. Is he right in doing so? Service tax is payable on construction of a residential complex having more than one single residential unit. Single residential unit is defined in the notification and means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family. If each of the floors of your house is a single residential unit in terms of the definition, the contractor is rightly demanding service tax. If the title of each of floors is capable of being transferred to another person by mutation in land/ municipal records, both the floors may be considered as separate single residential units. 7.9.8 Are repair, maintenance of airports, ports and railways liable to tax? Yes. They are liable to service tax and the same will be available as input tax credit to railways, port or airport authority, if other conditions are met. 7.9.9 I am setting up a wheat flour mill. The supplier of machines is demanding service tax on erection and installation of machineries and equipments in the flour mill. Is he is right in demanding service tax? There is no service tax liability on erection or installation of machineries or equipments for units processing agricultural produce as food stuff excluding alcoholic beverages. You are processing wheat which is made from processing an agricultural produce. Similarly erection or installation of machineries or equipment for dal mills, rice mills, milk dairies or cotton ginning mills would be exempt.