Buying under construction flat and service tax applicability

The definition of ‘Construction of complex service’ is being clarified/ scope extended that unless the entire consideration for the property is paid after the completion of construction (i.e. after receipt of completion certificate from the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly.

Following is text of clarification
"In the definition of the taxable services it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly."


Remarks: This seems to be most significant change in service tax this budget. This amendment is aimed to bring within the purview of service tax all the payments received by the builder/promoter/developer from the intended buyer of property before, during or after the construction of the property irrespective of nature of agreement. Only exception is purely sale of property after completion of construction on payment of entire consideration.