Service
482 Points
Joined December 2010
I blv WC service covered only specified contract where Vat/Sales Tax paid on Works Contract.
For reference Valuation in Works Contract is as follows:
Broadly, two options are available to service provider –
(a) Calculate value of service as per rule 2A of Service Tax (Determination of Value) Rules, 2006 (in short ‘Valuation Rules) and pay service tax at normal rate on such ‘value’. In such case, assessee can avail Cenvat credit of input services, inputs and capital goods
(b) Pay service tax under ‘composition scheme’ at 3.43%(1/3rd of current rate 10.3%) of ‘gross amount charged for works contract’ (inclusive of education cess and SAH education cess), under ‘Works Contract (Composition Scheme for Payment of Service tax) Rules, 2007’. As per rule 3(2) of Composition Scheme, the assessee cannot avail Cenvat credit of inputs. Thus, the assessee can avail Cenvat credit of input services and capital goods.
In both the cases, Vat/sales tax will not be included in the ‘value’ for purpose of calculating service tax.