Service tax- works contract

Service Tax Works Contract Composition Scheme has been resicended w.e.f. from 01.7.2012. How the Service tax liability to be calculated under new valuation rules in the contracts wherein Service Tax was paid under composition scheme?

Say for Example - A Contract was there wherein Material was Rs.40 & Services was Rs. 60. Service provider opted for composition scheme hence the liability against the contract was Rs. 4.12 (4.12% rate). As on date invoices of Rs. 80 have been billed and Service Tax paid comes to Rs. 3.3 under composition scheme. Now balance payable amount is Rs. 20 and it consists of entirely of Service. Under first valuation rule if value of material and Services has been indicated then the service tax is to be paid @ 12.36% on Services. Hence it needs clarification whether the service provider can value the works contract service as per second rule of new valuation rules i.e. consider 40% as Services for new works or has to compulsory pay service tax on Service portion left out.

As per recent amendments in service tax rules Under Reverse Chargeg Mechanism service receipient have to pay service tax on Manpower Supply and Works Contract Services received. My doubt is if the service provider already registered under service tax and collect the service tax  in the bill itself,is it required to make service tax payments against these bills under reverse charge mechanism. Since service tax already charged by the service provider in this bill.

Pl advise me 

Under the declared services the service portion  ofthe WC is liable to tax.

The options available wouldbe:

1. If the value of material transferred is clearly available and VAT paid onthe same, the balance @ 12.36%.

2. If vsuch value not detrminable then the abatements available: on 40% if original work, 60% if finishing , repair etc on 70%.

The cenvat credit on capitalgoods used + on input services wouldbe available inthese options.

My question is regarding exsiting contracts under composition scheme. The value of materials is available in existing contracts however compostion scheme was used to lower the service tax burden. Service Tax has already been paid. What rate to abe applied now for those contracts?

As per the Point of taxation Rules, 2004, Works Contract service is considered as continous supply of service. Now, as once you have opted for composition scheme, now you can pay the tax as mentioned in the slab under Rule 2 of the service tax (Determination of value) Rules, 2006.

In case of works contract , we make two bills ie one for materials and the other bill for labour charges .  Please let us know whether C form can be obtained for the material used in executing works contarct in case of inter state works contract ? Also let us know whether sales tax has to be paid on the labour charges involved in the executing of the works contract  or just service tax has to be paid on the labour charges . 

 

Thank you 

what is the ST payable 60 and 40 % . and 50% payable by sr. provider and remain by sr. recevier

please detail of value of WC service

 

Chirag  Revised rule 2A overrules Composition scheme ...

As Per Composition scheme rate was 4.8%

& now as per Rule 2A it is 40% on 12% i.e. 4.8% (in case of Original Contracts

70% of 12% in case of repairs reconditioning of goods &

 60% of 12% in case of otherthan original Contracts 

 

Yes as per your eg.

as total invoice value was 100, 80 been paid out earlier & 20 remains

you have to pay as per Rule 2A 20*40%*12.36 = .9888

you can go through this circular attached herewith

My Quation is that  If GST  is applicable   in same place Service Tax ,Vat  & Cst  can applicable  ?.

Applicability of Service Tax Notification No.24/2012-Service Tax dtd.6.6.2012 explaining the provisions of calculation of service tax on works contract