Dear All,
What is the rate of service tax on construction contract and on works contract.
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Rate of service tax
Replies (1)
The rate of service tax is 12.36% in either cases. Only the valuation method is different.
In case of works contract, the valuation method has been prescribed in Valuation Rules (Rule 2A). Rule 2A states the value on which the Service Tax is payable. As per the rule, in case you know the material value, then deduct the same from the total contract value, and pay service tax on the remaining. In case you do not know the material value, then standard abatements have been prescribed under different categories to determine the value on which service tax is payable. This provision is subject to the fulfilment of such conditions as prescribed in the rules.
In case of construction contract, abatement of 75% is available aubject to satisfaction of such conditions as prescribed.
Hope this clarifies your doubts.
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