Registration of labour contract service (construction contra

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CMA. RAJENDRA SONU THAKUR (Querist)
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07 February 2012 I a person undertakes labour contract service for construction work. if the contract does not involve material, under which head of service we can register this service as per SERVICE TAX. And Please suggest the rate of service tax on it.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 February 2012 please mention what nature of work you are engaging

CMA. RAJENDRA SONU THAKUR

CMA. RAJENDRA SONU THAKUR (Querist)
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09 February 2012 A contractor has undertaken labour contract of Commercial & residential complex from builder. the entire contract involve only labour charges. Please advise, for registration under service tax. and what would be rate of service tax.?

CA. Praveen Narayan

CA. Praveen Narayan (Expert)
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22 March 2012 Dear Sir,

I too have the same doubt. Can any one clear it?

Thanks in advance..

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2025 Gotcha! You’re asking about Service Tax registration and classification for labour contract services in construction work, specifically where only labour charges are involved (no material supply).

Here’s the breakdown based on the Service Tax regime before GST (since you mentioned 2012):

1. Under which Service Head to Register?
For labour contract services related to construction, the applicable service category under Service Tax (pre-GST) was:

“Works Contract Service”
Definition:

Works Contract Service means a contract for carrying out the work of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of any building, structure, civil work or a part thereof including a house or a complex.
Even if the contract involves only labour charges, this falls under Works Contract Service if the contract is for construction or related work.

2. When is Service Tax applicable?
Service Tax is applicable on the value of taxable service, i.e., the labour charges.
If the contract does not involve transfer of ownership of goods/materials but only labour, the entire labour amount is taxable under Works Contract Service.
3. Rate of Service Tax
As of 2012, the Service Tax rate was generally 12.36% (including Education Cess and Secondary & Higher Education Cess).
The basic service tax rate was 10%, plus 2% Education Cess (1% + 1%), totaling 12.36%.
4. Registration Requirement
If the aggregate value of taxable services provided exceeds the Service Tax threshold (Rs. 10 lakhs per year at that time), registration under Service Tax was mandatory.
For providing labour contract services, you would register under Works Contract Service.

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