service tax & Haryana vat applicable on work contract

This query is : Resolved

lalan kumar (Querist)
Follow

05 May 2016 Dear sir please give me proper detail where service tax and HVAT is applicable on work contract. what is procedure to pay tax ,what is rate of tax , &have any exemption or abatement there on

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
Follow

06 May 2016 Works Contract Services are a milch cow for revenue gathering and hence, even though illogical the same activity is subject to Central Service Tax and State VAT. The rates of VAT vary from state to state, and hence not being aware the provisions of Haryana VAT Act I will not be able to specify the same, but experience across various states present a trend of 67% materials subject to VAT and 33% towards labour exempted.There are certain exemptions and abatements (vary from state to state), provisions for deduction of VAT at source, exemptions for sub-contractors, etc. which can best be advised by a local consultant.

As far as Service Tax goes, 70% of the invoice is taxable. If the service provider is an individual and the service recipient a body corporate then the service provider is liable to collect 50% of the duty i.e on 35% of the invoice and the body corporate service recipient is liable to pay the balance 50% under Reverse Charge Mechanism. If the service recipient is not a body corporate, then the service provider is liable to collect the entire amount of service tax on 70% of the invoice and remit the same to the Government.

This results in an anamolous situtation in that the total dty is paid on 137 (67+70) percent of the invoice value, but then there is no relief therefrom.

Message likes : 1 times

lalan kumar

lalan kumar (Querist)
Follow

07 May 2016 thanks sir for kind reply but my further dilemma that , if a work contractor is raise bill of Rs 1000 than he will Shaw all amount of tax in his bill or only the part

lalan kumar

lalan kumar (Querist)
Follow

07 May 2016 he is liable to collect...I.e 35% of tax amount

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
Follow

10 May 2016 The Works Contractor will have to include the portion of tax he is liable to collect from the recipient in his bill. He should also mention that he is liable only to the extent of 50% of the duty liable and the recipient is liable for the other 50%.

Message likes : 1 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now