Indian Service Tax
Real Estate Agent and Consultant
Effective Date: 16/10/1998.
Authority: Notification No. 53/98-ST, dt. 7/10/1998 (for full text of Notification see under'Architect').
Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.
Definitions: "real estate agent"means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant; [Section 65 (88)]
"Real Estate Consultant" means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate; [Section 65 (89)]
Taxable service: Real Estate agent providing service to a client in relation to real estate.
Value of taxable service: The gross amount charged by such agent from the client in connection with the sale, purchase, leasing or renting of real estate including any advice, consultancy, assistance, relating to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing acquisition or management, of real estate.
Exemptions
(i) Actual construction of any building by builders/developers
(ii) Civil contractors, Lawyers, Interior decorators
Person liable to pay: Real Estate Agent or Consultant.
Head of Account
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Questions & Answers
Q. 1 Who is Real Estate Agent and Real Estate Consultant?
Ans. "Real estate agent" is a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant.
"Real estate consultant" is a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate.
Q. 2 What is the taxable service in case of Real Estate Agent?
Ans. Taxable service means any service provided to a client, by a real estate agent in relation to real estate.
Apart from the traditional services in respect of sale/purchase/leasing of real estate such concerns are inter-alia, providing services to real estate developers and promoters in respect of evaluation of a proposed real estate scheme/project by conducting techno economic studies, providing feasibility reports and by even helping in marketing real estate projects. Such services shall also attract service tax. It would include comprehensive realty services provided by International realty concerns, who are providing such services in India.
Q. 3 What is the value of the taxable service in case of Real Estate Agent?
Ans. Value of the taxable services in relation to the service provided by a real estate agent to a client, is the gross amount charged by such agent from the client for services rendered in connection with the sale, purchase, leasing or renting of real estate including any advice, consultancy or technical assistance relating to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate.
Q. 4 Would the services of actual construction of any building carried out by the builder/ developer be liable for payment of service tax under the category of service provided by the real estate agent or real estate consultant?
Ans. No, the activity of actual construction of any building, carried out by builders/developers would not attract service tax levy, as it is not a service within the meaning of the term real estate agent or real estate consultant.
Main text of Departmental Circular/TN
[TN No. 1I6/98-ST, Dated 15/10/1998 of Hyderabad Commissionerate]
8.1 As per Section 65(35)*, "real estate agent" means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant. Section 65(36)** defines a "real estate consultant" to mean any person who renders in any manner, either directly or indirectly, advice, consultancy, or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate.
8.2 The rate of service tax on realty service is 5%. It may be noted that some international realty concerns, such as Richard Ellis, Colliers and Jardine etc. have opened shop in India and they are providing comprehensive realty services. Apart from the traditional services in respect of sale/purchase/leasing of real estate, such concerns are, inter alia, providing services to real estate developers and promoters in respect of evaluation of a proposed real estate scheme/project by conducting techno-economic studies, providing feasibility reports and by even helping in marketing real estate projects. Such services shall also attract service tax. However, it is clarified that activity of actual construction of any building, carried out by builders/developers does not attract service tax levy as it is not a service within the meaning of the term real estate agent or real estate consultant.
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