Service Tax on Maintenance Charges

This query is : Resolved

Amit (Querist)
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30 November 2007 We are providing maintenance services to our clients and we are charging maintenance charges for that.We are charging service tax on service fees which is 15% of our actual expenditure on maintenance.Are we doing the right thing or we should charge the service tax on the whole amount i.e. including our actual expenditure.

Dayal

Dayal (Expert)
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30 November 2007 It is advisable to word the contract properly.

You can vivisect your contract for replacement of spares on which appropriate VAT to be paid and other for Service (repairs and maintenance.

It would be ideal to raise two different bills.

But if you have a composite contract then review the works contract service tax provisions

visit

https://www.caclubindia.com/homepage/DM%20Associate/

CA Prasanna Krishnan V

CA Prasanna Krishnan V (Expert)
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02 December 2007 Dear Sir

Unless you are able to prove that the expenses were met by you in Pure Agent's capacity (eight conditions are there to be fulfilled) you can not exclude the same from ST ambit.

As per the provisions of the Finance Act 1994 it is very clear that the gross amount (including reimbursements, subject to pure agent concept) is the amount to be taxed.

Please ensure that the contracts are worded properly and relevant supporting records are adequately available.