28 March 2013
works contract is the contract, in which the contractor will be bill to us for material and labour (combined billing).
there are some of the contracts that we can identify the material portion and Labour Portion. in that case the vat is chargeble on material portion and Service tax is on labour portion.
if it is not possible to differentiate the material and labour on bill, then please refer the schedule in vat act in which the ratio of material and labour are provide.
As per amended Service tax rules, the service tax is chargeable on 50% of Bill amount (i.e. labour charges) in reversed charge mechanisum.
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