In cases of sale of flats, transfer of title after the issuance of occupancy certificate will not attract service tax, the Finance Ministry said today.
The Central Board of Excise and Customs (CBEC) issued the clarification in relation cases to pertaining to areas under the jurisdiction of Municipal Corporation of Greater Mumbai -- Brihanmumbai Municipal Corporation (BMC).
"...It has been conveyed to the Service Tax Authorities in Mumbai (on October 23, 2015) that sale of flats/dwellings etc, where the entire consideration is received after issue of occupancy certificate by BMC, leading to a mere transfer of title in immovable property, falls outside the definition of 'Service'" under the Finance Act, 1994, and is "therefore, not taxable," the CBEC said.
The Board in the Finance Ministry said the clarification was issued to resolve a long standing issue relating to levy of Service Tax on sale of flats/dwellings etc after issue of occupancy certificate but before issue of completion certificate in areas under BMC.
Service Tax is levied at 14 per cent but housing projects attract abatement of 75 per cent, meaning it is levied on the 25 per cent of the cost.
