Service Tax under Works Contract

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Saurabh Mittal (Querist)

23 February 2011 We have carried out a construction contract for our client which was defined as an Indivisible Works contract consisting of civil and structural works.

We would like to know if we can charge our client service tax at 10.3% of the contract amount under the present service tax act or Is it necessary for us to go for composition scheme under the Works Contract Act.

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)

23 February 2011 You can opt for composition and pay 4.12% of the contract amount. Alternatively, tax may be paid @10.3% of the contract amount less turnover declared under VAT representing value of materials used in the works contract.

Saurabh Mittal

Saurabh Mittal (Querist)

23 February 2011 we would like to charge 10.3% on total contract value from our client and deposit the same after taking cenvat credit of excise duty and service on our inputs.

Is this option available in the act.

Guest

Guest (Expert)

24 February 2011 Yes you can charge 10.3% of the total contract value from your client, take input credit on inputs and services and the balance can be remitted to government a/c.

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