Works contract

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2013 what will be the treatment of service tax under composition scheme in case wehere the contractee provides you the Material and the contractor carries out the labour work on it.

Will taxable value still be 40% of Labour portion only.

Also works contract must involve transfer in property but in above case there is no transfer of property in goods as they are supplied by the contractee i. e the service receiver

pravin

pravin (Expert)
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12 February 2013 hi dear....

as per definition of work contract under service tax is
- there must goods transfer in execution of contract
- there must be VAT on goods transfer
- the contract is execution for movable or immovable property.

if above condition fulfilled than only it consider as work contract

in case of your query, there are not transfer any vatable good from contractor to cotractee....there are only supply labour work by way of contract

however for supply only labour / man to execution contract is consider as man power supply service for that service tax rate is 12.36%

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2013 Sir,

So in respect of ur answer , if any material is provided by contractee to the contractor to work on , there is no transfer of property in goods. ????

then as per the provisions while calculating 40% under composition scheme of original works , we have to deduct value of material charged by receiver..from (Gross value recived + Fair market value of goods), Why will the reciever charge anything from the provider ????

Confused i am