Reverse tax on sub contractors without registration
This query is : Resolved
16 November 2016
Hello,
Our company is a construction company. We have sub-Contractors without Service Tax Registration. They are below the 10 Lakh limit. Is reverse tax payable on these services???? if yes in what rate???? Please Explain
Our company is a construction company. We have sub-Contractors without Service Tax Registration. They are below the 10 Lakh limit. Is reverse tax payable on these services???? if yes in what rate???? Please Explain
CA R SEETHARAMAN
(Expert)
16 November 2016
Yes reverse charge applicable. The company is liable to pay 50% of service tax under reverse charge (50% of service tax at 15% on 40% value of contract in case of original works).
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16 November 2016
But the sub-contract include only labour and no material. in cases like this CERA audit team said need not to remit reverse tax if contract is only labour and no material
CA R SEETHARAMAN
(Expert)
16 November 2016
As you will be supplying the material it will fall under works contract. Payment for the work will be based on quantum of work done not on quantum of labour supplied.
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