Service tax applicability % on electrical works contractor
This query is : Resolved
19 June 2013
Hi,
We are registered Private Limited Company and providing ELECTRICAL Works Contract Services to our various Client.The Scope of Works includes Supply of Materials as well as labour and we are registered as Works Contractor.
Now the Questions are: -
1. If we are providing Electrical Works Contract then the Material & Service Portion are divided in the ration of 75:25 (75% Material and 25% Labour Charges). Am I right?
2. We only need to remit the State Value Added Tax (Sales Tax / VAT) on 75% of the Total Value of Works Contract Provided. Is this correct way of calculation?
3. We also need to remit the Service Tax on 25% of the Total Value of Works Contract Provided. Is this correct way of calculation? Please confirm
4. If the above stated methods are correct, whether we need to raise separate Invoices for Materials Cost and Labour Charges? Or can we raise single Tax invoice?
Please explain about the applicability of Service Tax and VAT for the above stated transactions in detail.
Thanks.
Gireesh Hegde
We are registered Private Limited Company and providing ELECTRICAL Works Contract Services to our various Client.The Scope of Works includes Supply of Materials as well as labour and we are registered as Works Contractor.
Now the Questions are: -
1. If we are providing Electrical Works Contract then the Material & Service Portion are divided in the ration of 75:25 (75% Material and 25% Labour Charges). Am I right?
2. We only need to remit the State Value Added Tax (Sales Tax / VAT) on 75% of the Total Value of Works Contract Provided. Is this correct way of calculation?
3. We also need to remit the Service Tax on 25% of the Total Value of Works Contract Provided. Is this correct way of calculation? Please confirm
4. If the above stated methods are correct, whether we need to raise separate Invoices for Materials Cost and Labour Charges? Or can we raise single Tax invoice?
Please explain about the applicability of Service Tax and VAT for the above stated transactions in detail.
Thanks.
Gireesh Hegde
20 June 2013
Hi Gireesh,
Answer for your questions
1) Yes, you are right as per the Rule 3 of the Karnataka VAT rules 2003
2) Yes, subject to Deduction available i.e payment to Registered sub-contractor
(note 1: if you claim the sub contractor deduction then No input tax credit in respect of that sub contract payment )
(Note 2: if you are under COT scheme then You have to pay VAT on 100% of the receipt subject to deduction in respect of payment to registered sub-contractor.)
3) No, the valuation of taxable service under service tax has different methods you have to work out which is more beneficials to you.
4) There is harm in raising a single tax invoice.
if you need more details on valuation under service tax do let me know...
Answer for your questions
1) Yes, you are right as per the Rule 3 of the Karnataka VAT rules 2003
2) Yes, subject to Deduction available i.e payment to Registered sub-contractor
(note 1: if you claim the sub contractor deduction then No input tax credit in respect of that sub contract payment )
(Note 2: if you are under COT scheme then You have to pay VAT on 100% of the receipt subject to deduction in respect of payment to registered sub-contractor.)
3) No, the valuation of taxable service under service tax has different methods you have to work out which is more beneficials to you.
4) There is harm in raising a single tax invoice.
if you need more details on valuation under service tax do let me know...
Message likes :
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24 June 2013
Thanks Mr.Ravi.
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