What is the abatement rate in labour contract/contractor
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Service tax
Replies (2)
follow rule 2a(ii) on presumptive basis to determine service tax payable
because in case of works contract the word abatement is not used..rather specific percentage of work is taxable
Firstly, Ashok, there is no abatement prescribed specifically for a works contract (except for construction services).
As explained above, there is Rule 2A of Valuation Rules, which prescribes for valuation mechanism, wherein you may pay either identify the labour portion and pay Service tax thereon or pay on 40% value (original works) or 70% (other works contract).
Please be specific in your query, as the specific details of the contract is missing to identify whether it would be original works or other works contract.
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