The Finance ministry has given builders a cause for celebration by announcing that the ministry has decided to exempt builders and developers of residential projects from the service tax net.

According to the report, the builders will not come in the sphere of paying service tax if they provide work for direct labour. At the same time, if they would take the help of any contractor to complete the project. The contractors will be legally responsible to pay the service tax.

The Union government had imposed the concept of service tax in last year’s budget. After the government’s decision to take service tax from builders, the builders across the nation had opposed this tax by saying that it amounted to double taxation.

Now, the Union finance ministry has finally taken a decision on this matter and issued the clarification for the exemption of builders, residential developers, undertaking residential constructions from the service tax net.

Earlier, the Promoters and Builders Association of Poona (PBAP) and the Marathi Bandhkam Vyavasayik Sanghatana (MBVS), both from Pune, had urged the finance ministry to take back the imposition of service tax from the builders. They had also filed a case in the Bombay high court in this matter. Now on Saturday, the organizations received copies of the circular issued by the finance ministry dated August 23, 2007.

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