Service Tax on Works Contract and Labour Contract

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Ankit (Querist)
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19 January 2010 I have 3 queries:

1. What is the difference between works contract and labour contract?

2. Whether the service tax is charged on these two contract?

3. Whether section 194C of IT Act is applicable on these two contracts?

Please reply.

Thanking in advance

CA Prashant Gupta

CA Prashant Gupta (Expert)
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19 January 2010 1 Works contract-it is a contract for service in which contractor give instruction to do work according to his requirement. It can be only for services or services with some material with specific work done on it also.
On the other hand in labour contract contractor got only labour work not supply of goods.
So works contract is a wide defination which comprises labour contract also.
2 Service Tax is charged on both
3 Sec 194C is applicable on it in both cases TDS will be deducted.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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19 January 2010 Agree with above view

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