Application of both servicetax & vat

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Jay Sata (Querist)
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17 October 2012 sir,
i have seen that one website devlopment co.has devloped and designed site for my client n have charged service tax & vat both as a percentage of 12.36 and 4+1 respectively. so i want to know wheather both is applicable and if yes than wats the reason for charging the both combine???

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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17 October 2012 vat and service tax both are levied genearlly in case of works contract where supply of goods as well as service is involved..on the goods/materials part,vat is levied and service tax is levied on labour/service part..

Acoordingly,you need to verify the same

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Jay Sata

Jay Sata (Querist)
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18 October 2012 ya sir but itz of website devlopmen...so n itz not possible to biforgate coz they have charged both on full amt of invoice...

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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18 October 2012 then they must have charged St on 40% of billvalue

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Jay Sata

Jay Sata (Querist)
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18 October 2012 no they have charged st @ 12.36% and vat @ 4+1%

Jay Sata

Jay Sata (Querist)
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18 October 2012 m'am can i know why they have to deduct 40% st

Jay Sata

Jay Sata (Querist)
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18 October 2012 m'am can i know why they have to deduct 40% st

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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18 October 2012 under the alternative method,where the bifurcation is not done st should be charged on 40%/60% on bill value depending on the nature of works contract

Jay Sata

Jay Sata (Querist)
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18 October 2012 k thx so now what i have to do whether to deduct tds or not or if yes than 194(c) or 194(j)

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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18 October 2012 if there was a contract with the client,194c otherwise 194j

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CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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18 October 2012 Dear Jay,

Can You Specify Here With Numericals.
Because on Total Invoice 12.36% + 5% Cant be Charged.
Otherwise You Please Confirm it Once Yourself.
Apart From This TDS@194C Need to be Deducted, Since Its Forming a Contract.

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Jay Sata

Jay Sata (Querist)
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18 October 2012 total biil amt.121600
s.t.@12.36% 15030
vat @ 4% 4864
vat @ 1% 1216
total 123095

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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18 October 2012 Your Total Bill Amt. 121600, or 123095/-

Check Again.

Jay Sata

Jay Sata (Querist)
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18 October 2012 total amt is 142170
less discount is 19615
so amt is 123095...

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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18 October 2012 This Bill is Wrongly Constituted.

Since This is New Work Contract in This Case Only on 40% Portion is Service Tax Chargeable.
VAT as Applicabel in State Wise that is 2% Most of State.at Composite rate.

Bill Should be:-
121600
+service tax @20% under partial service tax reverse charge
+ on total amount VAT @2% or as applicable.

Jay Sata

Jay Sata (Querist)
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18 October 2012 why service tax @ 20% & vat& 2%

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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18 October 2012 I Mean Service Tax 20% of 12.36. Paid & Invoiced by Developer.
& Rest 20% of 12.36 Paid by U directly to Goverment.

Jay Sata

Jay Sata (Querist)
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18 October 2012 sir
can i know reason behind it?

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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18 October 2012 partial reverse charge mechanism..pls go through the amendments in works cotract