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FAQ: Does the land owner have to pay service tax too? - Property Hotline
Posted
June 9, 2016
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2,118
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June 9, 2016
2,118
8
1
0.42%
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7:29Now PlayingBe Un Confused
Expert: Pannkaj Ghadiali, Managing partner, PC Ghadiali & Company
Q: In a joint development project, why does the landowner not have to pay service tax, if the developer hands over the property to the land owner as per their agreement?
Answer: Firstly, what the developer is paying to the land owner is nothing but consideration for the land and land owner is not a buyer of flats. Therefore, in my opinion no service tax is payable. Further the concept of service tax was that when a buyer buys a property under construction, he is getting a service from the builder in terms of getting the property constructed. Therefore, there is a case for levy of service tax. In this case however the developer is giving the constructed units towards consideration for land and hence no service tax is payable. However, this is highly debatable and will invite litigation.
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