Service tax calculation in works contract

This query is : Resolved

Ch.Naga Srinivasa Rao (Querist)
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26 May 2016 Hi,
We are the manufacturing company and we are giving civil works to one of the sub contractor. He is charging service tax 5.8% & Works Contract @2% on Total Bill amount.Material and labour portion involved in this contract.May be he opted composition method. In this method reverse charge applicable to service receiver.

Could you please provide service tax calculations in Regular and Composition Methods with abatements.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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26 May 2016 In regular service tax under WCT On original contract charged 40%, if under RCM 50% to be charged by services provider, 50% by service recipient. Vat applicable depends on each state. In Karnataka vat charged on 70%.

In composition if Service tax charged on gross value@ 5.8%, RCM Not applicable on Composition tax.

Ch.Naga Srinivasa Rao

Ch.Naga Srinivasa Rao (Querist)
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27 May 2016 Thanks for your information. Work executed in Telangana State. As per Telangana VAT Act VAT applicable 5% tax on 70% of Gross Bill. As per service tax, tax applicable 14.5% on 40 % of Gross Bill in regular method.In this method 10% of Gross Bill (70+40=110) charges double tax VAT & ST. How to avoid this double tax on 10% of Gross Bill.

One more query that , In Composition method VAT Applicable or not on Gross Bill.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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27 May 2016 In works contract vat and service tax worked on gross amount of Bill not on proportionate, service tax worked @5.8% and vat 4% on the the gross value of invoice.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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27 May 2016 No double taxation if you opt regular method you are liable to tax @ 14.5 for 110, since both vat and cot will be @14.5%.
But in your case you have to pay together @ 10.8% on 100 value.

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