Service Tax Works Contract Tax Valuation under Rule 2A(1)

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This query is : Resolved

Rajendra Prasad (Querist)

09 June 2010 Hello sir,

We have received advance against Works Contract of Rs.10,00,000/-.We are calculating Service Tax payable, under the Service Tax Valuation Rule 2A(1). Under this how to calculate the taxable value and Tax Amount.

Please guide me.

Rajendr Prasad.

Sumit gupta

Sumit gupta (Expert)

10 June 2010 material on which vat is paid need to b subtracted from 10lac then on the rest amt u can charge s.tax. bt vat should have been paid on actual basis not on composite scheme basis. and if u want to pay s tax on composite basis u need to pay 4% of 10lac plus any other material given by service receiver.

Shyam Lal Naik

Shyam Lal Naik (Expert)

10 June 2010 Assuming that you have opted for Composition scheme, the tax liability shall be:

4.12/(100-4.12)*Rs. 1000000 = Rs. 42,970/-

As the amount is received in advance, it is assumed that the deduction towards VAT actually paid is nil.

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