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The government said it would issue clarification on works contract which was included under service tax net this year. "We will issue clarification with regard to the ongoing contract after formal examination," Finance Ministry Joint Secretary (TRU-II) R Sekar said at Service Tax conference organise
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A works contract involves the transfer of both goods and services, and tax is levied on the services rendered during its execution.
Services covered include those for erection or installation, commercial or industrial construction, turnkey projects, and construction of complexes.
Yes, contracts for specified infrastructure projects such as roads, airports, railways, and ports are exempt from service tax.
The Finance Ministry stated that a clarification would be issued after formal examination, but no specific timeframe was provided.
Two master circulars on technical and procedural issues related to service tax will be issued by the end of next month.
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