15 July 2010
Tax has to be paid as per 'works contract (composition scheme for payment of service tax) rules,2007'. Tax rate specified in rule 3 is reproduced below.
Notwithstanding anything contained in section 67 of the Act and rule 2A of the Service (Determination of Value) Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to [Four] per cent of the gross amount charged for the works contract. It has to be increased by education cess, secondary and higher education cess meaning thereby the effective rate is 4.12%.
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