Works contract

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Leena Thanvi (Querist)

31 August 2013 dear sirs,
one of our client entered in to works contract with a pvt.ltd co in 2009-10 for the construction of water treatment plant. the amount of the contract was of rs.38,76,30,000/- bifurcated in three items.
(1) design and engineering 7200000
(2) supply of material 182430000
(3) construction(incl.material) 198000000
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total 38,76,30,000

please explain me the charging pattern of service tax. we want to enter in the VCES,and all the criterias to enter in to the VCES scheme has been fulfilled by the client. thank you

Jagdishkumar M Gor

Jagdishkumar M Gor (Expert)

02 September 2013 Please note that you have to pay the service tax of service, value of construction with material is very high, so you have to bifurcate with material and service and on protion of service you have to pay the service tax, So you are having 2 optoin (1) on desgin you have to pay 10.3 % = S.Tax = 741600.00, for constuction generaly 70% is material and 30% is service, (you have to bifurcate actual) so amount of service tax 10.30% on 30% value = 6118200.00, total amount of payment of service tax = 68.60 lacs.
(2) If you go by WCT then you have to pay the service tax on gross amount of contract i.e. on value of 387630000.00 and rate of WCT is 4.12%, and service tax amount is 1.66 crore.
so best option is based on bifurcation of mateiral and service for contruction value.
thanks
JMGOR

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