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Works contacts services

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30 July 2012 Dear Expert, Kindly provide me all such relevant details about taxability of Work Contract Service.

Composition Scheme is optional or mandatory, Abatement (if any), Rate of Service Tax.
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RENGARAJ R.K

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RENGARAJ R.K (Expert)
30 July 2012 1) Composition scheme is withdrawn from 01.07.12.

2) New construction = 12.36% on 40% of the total contract value (including labour plus materials) Abatement is 60%

In case if you are filing vat return and showing the value of material cost separately under vat act, then the service tax 12.36% is payable only on the balance value of the contract, i.e labour cost only.

If you are a firm or individual, then under reverse charge mechanism, you need to pay only 50% of taxable turnover on the above working and balance 50% will be paid by the service receiver. Also, Kindly see all the relevant notifications on works contract.
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