In case of works contract services, how to calculate taxable amount after calculation of threshold exemption where service tax is payable on 40% amount of Gross consideration received ?
For examle : Total consideration received for works contract service is Rs. 25,00,000 and service tax @ 4.944% (12.36x 40%)is inclusive in that amount.Now, the threshold exemotion will be of Rs. 10,00,000 or Rs. 25,00,000 (10,00,000/40%)?
The exemption limit is Rs. 10 lacs of the taxable services billed and not 25 lacs.
Regards,
CA C P Viswanathan
Mr Rohit,
When a contract is for only services,not including any material,then the whole value of contractis becomes liable for ST @ 4.94%,not just 40% of it. The 40% ratio is applicable when works contract includes both material and labour in its execution......mjk
there is no proviision of Small Scale service provider in case of works contract... In your case Rs.25,00,000 is the taxable amount and service tax payable shall be 4.94% X 25,00,000 i.e. Rs.1,23,500
there is no proviision of Small Scale service provider in case of works contract... In your case Rs.25,00,000 is the taxable amount and service tax payable shall be 4.94% X 25,00,000 i.e. Rs.1,23,500
Under service tax act, once you cross taxable limit of Rs 10 lacs , service tax is leviable on entire amount
In example sited by you ,the contract value is Rs 25 lacs and value of material and services could not be
bifurcated
Then 40% of Rs 25 lacs shall be service portion shall be taxable @ 12.36%.
now answering very specific to your query ,assuming you have not provided any service besides this then the value of service provided arrived at Rs 10 lacs (40% of Rs 25 lacs) .
Now since you have not cross rs 10 lacs limit , you have two option either to avail benefits of thress hold limit or to pay service tax and collect from customer
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