I have received WorK Order frm one of our client for " Supply ,Erection and commissioning of the Electrical structures including all associate works like civil works , jungle clearance, approach road formation etc.,
We have completed the everything. Now we have raised an invoice as under:
But our client not accepting clear WCT. advised to raise as wct-70% and Service Tax 30% on basic amount. Note : We cannot bifurcation material cost and service cost.
27 December 2014
As you can not bifurcate material cost and service cost you have to opt for WCT at 5% and service tax on 40% on basic amount.
You have to convince your client that wct is not applicable on 70% it is only VAT is applicable, which may be at 14.50% there may not be big difference whereas you land up in paying higher tax.
27 December 2014
It seems that client do not wants to accept as work contract since in that they need to incur additional cost as taxes. But you need to comply the relevant provision laws.
If it work contract and price cannot be segregated you need to charge Service Tax @ 12.36% after claiming rebate @ 60% under rule 2A(ii) of Service tax rules 2006
Note: If client is still not willing for treat as wholly work contract you need to modify your contract, if already there, or create new one on the their treatments
CAclubindia
