Works Contract Tax

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BISHNU DEO SHARMA (Querist)
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23 March 2009 Dear All,

Pls. guide me , in what kind of supply or service vat & service tax both have charged on 100 % value.

I have receive 1 one bill from our PEB(Pre Engineered Building) Supplier and they have charged both service tax & vat on 100 % of value. They have fabricate the building structure and install in our factory. In my view in this vat & servicet tax will charges on some percentage not on 100 % value i.e. Vat on 40 % of value and service tax on balance 60 % value.

Pls. suggest me with example.

Regards
Bishnu.

Dayal

Dayal (Expert)
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23 March 2009 Particulars Option 1 Option 2 Option 3

Value Chargeable to tax 1,000.00 200.00 1,000.00

Rate of Service tax 2.06% 12.36% 12.36%
Service tax incl. Cess 20.60 24.72 123.60

Less: Cenvat credit - - 115.36

Service tax payable in Cash 20.60 24.72 8.24

Put this in table form, less cenvat credit will fall in table 3

Now check with your service provider which option he has exercised and you have your answers

BISHNU DEO SHARMA

BISHNU DEO SHARMA (Querist)
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23 March 2009 SIR ,

You do not understood my question, pls. read again than reply.

regards
Bishnu.

SIDDHARTHA SANKAR ROY

SIDDHARTHA SANKAR ROY (Expert)
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25 March 2009 They should charge service tax only on installation charges, if they are showing installation charges separately in the bill.But, if they are charging on composite basis, then either the should pay service tax on 33% of the gross value after availing 67% abatement.Pl give the details of your contract agreement.

BISHNU DEO SHARMA

BISHNU DEO SHARMA (Querist)
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25 March 2009 Siddhartha Sir,

You are extremly right, i think as same u told me but they have charged both vat & service tax on net Bill amount. As per our order party have fabricate all PEB Structure as i told above than dump in to our site and than complete install the instruction and his job is finally over.
Reagards
Bishnu.

Arbind Aggarwal

Arbind Aggarwal (Expert)
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29 March 2009 This activity will be covered under works contract and both service tax @ 4% on composite value and work contract tax as per local vat act will be leviable.

To avoid such situatuins always make two contracts one for services to be provided and another for materials and pay approprite taxes.

This issue is not very clear as both the centre and state are demanding tax on works contract.

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