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Valuation of joint development projects - Confusion galore


Pay early on lower value or pay late on higher value

Excellent Article.

If the developer/builder follows Section 67A read with Education Guide Para 6.2.1, he has to pay service tax EARLY i.e. on the date of transfer of land by landowner, on which the value of land would be generally LOWER, as compared to the second situation as given below.

If the developer/builder follows latest Instruction dated 20.01.2016 read with Circular dated 10.02.2012, he has to pay service tax LATER, i.e. on the date of transfer of flats to landowner. On this date, the value of land would be generally HIGHER than the value prevailing at the time of entering into agreement with landowner.

I think, the word “fall” used in the fourth paragraph of the article may be read as “rise”.

These are personal views.

Shvetal Parikh 01/02/2016

 

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