Sir, I am confuse to understand the difference between of work contract and civil contract with example
Sir, I am confuse to understand the difference between of work contract and civil contract with example
Works contract has already been defined under Section 65B(54) of the Finance Act, 1994, which includes various contracts, involving transfer of title in goods while executing a contract, such as construction, repairs, maintenance, etc.
Further, there is no definition separately prescribed for ‘Civil contract’, but it shall be a works contract if it satisfies the aforementioned definition.
Please be specific in your query, as the purpose is missing.
I have received a invoice for running civil work from a builder contrators amount Rs. 950000/- I like to know under what case service tax be applicale. if we supply material or vice versa case
As already explained, there are two methods for a works contract in terms of valuation and payment of Service tax: either identify the value of service element out of the contract and pay Service tax only on such amount or pay Service tax @ 40% (original works) / 70% (other works contract) value of the contract.
Thus, if it is not possible for you to identify (which is the general case) the labour element, you may opt for the second option to pay Service tax on ad-hoc value basis.
Original works has been defined under Explanation 1 to Rule 2A of the Valuation Rules, as -
“(a) “original works” means-
thus, if your contract is for a new construction, etc., then you should be able to pay Service tax on 40% value of the contract, otherwise on 70% value of the contract price.
No specific definition prescribed in the Service Tax Law.
works contract is a term of all contracts, where financial transactions are involved, and for ease of taxation, specific guidelines are issued,
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in general means
where the contractor himself has provided goods as well services, and unable to break the values of goods and services.
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for ease of applicability
all three terms are there as new construction, addition / alteration , and errection / commisioning
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if materials are supplied by principal then 100% of invoice value is taxable, as it does not contain any goods component,
if materials are supplied by contractor, then 60/40 for fresh construction cases and 70/30 for remaining.
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if materials are supplied by contractor then,
apart from service tax, state applicable VAT would be also applicable
Hi, Nitin, as the definition is not prescribed, one needs to identify this as per the terms of the contract.
Thanks everybody for all replies but my question is how can i differentiate work contract with civil contract as we given a contact to builder. contract terms says builder will purchase all material in name of compant and he will only raised the invoice for his service so can we treat as work contract
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