INTRODUCTION
Real
estate is undoubtedly one of the most complex sectors, be it from the
perspective of levy of tax, quantification of tax or the claim of input
tax credit. This is perhaps because there are different facets involved,
as a transaction of sale of constructed unit is not a simple
transaction of sale of goods or services but is a complex transaction
involving transfer of land / share in land, transfer of goods in the
execution of contract and the provision of services of construction.
From the perspective of indirect taxes, a contract for sale of unit, be
it residential / commercial, is a works contract also involving the
transfer of land / share in land.It is for this reason that
under legacy laws, i.e., VAT and service tax, a lower tax rate was
prescribed. For instance, in VAT, in Maharashtra, the sector had an
option to pay tax at a standard rate of 1 per cent of agreement value
while service tax was levied on 1/4th of the agreement value or 1/3rd of
the agreement value. While the rate prescribed under VAT law was a
composition scheme, meaning no corresponding input tax credit for the
dealers, under service tax, the taxpayer was eligible to claim CENVAT
credit, though only on input services, i.e., credit of tax paid on
capital goods and inputs was not available. This restriction on claim of
input tax credit was through a conditional notification, w
