Abatement on works contract

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2013 Dear Sir,
In following three conditions, How much service tax will pay by receipient?

1) If there is 60% abatement on works contrat that means service tax payable is 40%.
2)Service provider is not liable for service tax
3)As per Revers Charge Mechanism Works contract is payable 50% for Service Provider & 50% for receipient

CA Suresh Jain

CA Suresh Jain (Expert)

18 August 2013 Where receiver of the service is not able to arrive at the value as per section 2A(i) of the service tax (determination of value) rules, the value shall be calculated in as per sec. 2A (ii)
(ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:-

(A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract;

(B) in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent. of the total amount charged for the works contract;

(C) in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property , service tax shall be payable on sixty per cent. of the total amount charged for the works contract;

On the value arrived at as above the recipient need to paid service tax on 50% of the value.

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