Works contract

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Pooja Agrawal (Querist)
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20 August 2012 Hi,
Can anyone please tell me that if a supplier is providing us the works contract service then what will be its implications. I want to know the detail procedure to be followed by us.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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20 August 2012 The new partial reverse charge mechanism is applicable to services provided or agreed to be provided by way of
(a) renting of a motor vehicle designed to carry passengers on non-abated value to any
person who is not engaged in a similar business, or
(b) supply of manpower for any purpose, or
(c) service portion in execution of a works contract;
by any individual, Hindu Undivided Family or partnership firm, whether registered
or not, including association of persons, located in the taxable territory to a business entity registered as a body corporate located in the taxable territory. Thus the nature of the service and the status of both the service provider and service receiver are
important to determine the applicability of partial reverse charge provisions.

In respect of services provided or agreed to be provided in service portion in execution of works contract, 50% of the service tax shall be paid by the service provider and remaining 50% shall be paid by service receiver in the case given above.

The service tax rate is 4.944% and 50% of it will be paid by service provider and remaining 50% by service receiver only if it fulfills the criteria mentioned as above

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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20 August 2012 To get the answer of the particular query/question, pls elaborate/describe the problem.
thanks

Pooja Agrawal

Pooja Agrawal (Querist)
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20 August 2012 Thanks Sir,
Please can u tell me that while billing the supplier should charge 100% service tax or only 50%

Pooja Agrawal

Pooja Agrawal (Querist)
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20 August 2012 we are a closely held public limited company.. our suppliers are individuals, partnership firms and AOP who are providing hte services of supply and erectioning. Our company has taken registration under business auxilliary service. Now when sub-contractors are providing us Works contract servise i.e material + labour portion. How should we ask them to raise a bill on us through work order.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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20 August 2012 He should raise the bill by charging 50% of Service tax i.e
50% of 4.944.

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