Service tax on works contract

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 March 2013 Dear Sir,

My name is Manoj Kumar Gupta , residing at Kolkata , working as Sr. Accountant in M/s AKJ Engineers Pvt.Ltd.

I have a doubt in my mind regarding reverse charge mechanism in relation to works contract service :-

We are a Pvt.Ltd. company doing Civil works contract to the tune of Rs.20/- crore plus , We are procuring works contract from the construction companies & Govt. bodies and sub leting the service part of the job to small sub-contractors. They are doing the labour job only on sq.ft/ Sq.m basis . All the required materials, consumable , T & P are being supplied by us only. All these sub contractors are proprietorship concern and small contractors below the ceiling limit of 10/- Lac's.

Now my question is that these small sub contractors are not registered with service tax , under the reverse charge machanism wheather we are liable to pay the service tax on all these sub contractors. and wheather we are entitle to set off the said paid service tax with our output or not.

I will be kind enough if i find the answer of my query . Your early action is highly appreciated by me.

Thanking you

Manoj Kumar Gupta

CA Himanshu Kansal

CA Himanshu Kansal (Expert)
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12 March 2013 Dear Manoj,

By virtue of proviso to the notification 33/2012, the benefit of threshold exemption of Rs. 10 lakhs is not applicable to those cases where the service tax is payable under the reverse charge mechanism irrespective the service provider is proprietor or registered or not. your company is liable to pay 50% service tax on such services and can claim ITC in respect of service tax with the output tax liability on the basis of GAR-7 challan

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