Civil contractor

Service Tax:

If you are providing construction service to govt.or local authority, then the main service is exempt by virtue of entry no.12(d) of N/N 25/2012-ST. Accordingly, sub-contractor services of works contractor are also exempt vide entry no. 29(h) of N/N 25/2012-ST.

In case services are provided to non-govt. entities, the same shall fall in the ambit of service tax. And accordingly, the said works contract shall be valued as per rule 2A of Valuation rules(N/N 24/2012-ST). And since it is a new construction, 40% of gross amount charged shall be taxable(in case material and labour are not bifurcated, i.e. consolidated amount).

VAT:

It shall depend on the provision of the respective state in which the said works contract is executed.