Service tax

Dear Mr. Arumugam,

Service tax liability in case of 'works contract' can be calculated in two methods (as per Service Tax (Determination of Value) Rules, 2006):

First method:

This method has to be followed when value of service is clearly separable from material value out of the total contract value.

Under this method, service tax has to be paid only on value of service.

Suppose in your case, out of total contract value of Rs.30L, if material value is 20L and value of service is 10L, then service tax has to be paid on Rs.10L i.e.10L*14.5%.

If you are registered as an individual, proprietory firm, partnership firm and you are providing to body corporate, then your liability would be only on 5L i.e.10L*50%*14.5%. However, you need to discharge service tax on 10L if you don't satisfy the both conditions. (SP & SR)  

Second method:

This method has to be followed when value of service is not separable from material value out of the total contract value.

In such a case, then you need to pay service tax on 40% (in case of new constructions)/ 70% (repairs, maintenance w.r.t goods or an immovable property) of the total contract value.

In your case, since you are constructing a new building, you need to discharge service tax only on 40% of total contract value.

Hence, out of total contract value of Rs.30L, service tax has to be paid on Rs.12L (30L*40%) i.e.12L*14.5%.

If you are registered as an individual, proprietory firm, partnership firm and you are providing to body corporate, then your liability would be only on 6L i.e.12L*50%*14.5%. However, you need to discharge service tax on 10L if you don't satisfy the both conditions. (SP & SR) 

Invoice:

Invoice has to raised within 30 days of receipt of amount and shall be raised for an amount including TDS i.e. service tax to be discharged on TDS portion also.

Hope you meet the requirements.