Service Tax on Job Work

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Vijay (Querist)
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12 October 2008 Dear Sir,

My Factories ragistration as manufacterer of Crankshaft. But for a 3 Years we could not take production of Crankshafts. We received Forged Crankshaft from Tata Motors on 57 F ( 4) , and then we are doing job work ( Grinding , Machining, Induction & Hardning ) on crankshaft. At the time of Billing to Telco we are not applying service tax .

My Job Work turnover for the year 2007-2008 around 3 Crore. and also same turnover for the year 2008-2009.

Please give me details , what is the limit of applying service tax. & is it required undertaking for service tax?

Thanks

Vijay

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 October 2008 If the gross receipt billed exceeds Rs Ten lakhs per annum you are supposed to collect and pay service tax.Job works comes under works contract u/s 65 (105)(zzzza).General rate is 12.36% and compounded rate is 4.12%.

CA V. Mohanakrishnan

CA V. Mohanakrishnan (Expert)
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13 October 2008 since the same is being received on 57F(4) there is no credit which is taken and the material is not a purchase for you.

accordingly any job-work done would only constitute service component and not any include sale of material. (please correct if the understanding is wrong)

Hence there would not be composite contract. The service part which is the job-work should be taxed as 12.36%.

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