When the landowner is given flats in lieu of cash, such flats become liable to service tax, says the Finance Ministry's clarification of February 10, among other things. Suppose, the landowner invites a builder to demolish his bungalow and construct 10 flats thereon, with two flats being allotted to him as sale consideration, the two flats, though for non-cash consideration, would attract service tax immediately on signing of the building agreement. The taxable value would the amount for which similar flats have been booked by the other buyers on the date of such agreement.
Source: The Hindu Business Line
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