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Service tax - rcm query

Manjunath S (Asst. Officer - Indirect Taxes) (115 Points)

23 October 2016

Dear Sir, We are public Ltd Company, we asked our service provider to dismantle & construct a new compound wall, and all the materials for construction is supplied by us only. a) Manpower is supervised by Contractor b) Material supplied by Us.

For this he charged only Labour Charges, and No Service tax since he has not crosed his turnover of 10 lakh. Being a service receiver , is it require to pay service tax under RCM ? Or ignore it as a job work. Please suggest.

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160317 Points)
Replied 23 October 2016

The erection of compound wall is considered as Works contract, and being service receiver as body corporate, you are liable to pay service tax under RCM as ratio of 50:50.

Manjunath S (Asst. Officer - Indirect Taxes) (115 Points)
Replied 25 October 2016

Dear sir, thanks for your reply.

Sir, there is no transfer of material involved in this transaction. All materials are supplied by the company only. IS it still comes under works contract.

Kindly explain in brief.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160317 Points)
Replied 25 October 2016

The contractor worked with some material, though that was supplied by you; hence it comes under works contract. For calculation of value of contracted work, the value of material supplied by you is included.