Service tax abatement

Dear guys,

i am working in limited construction company,  latestly we had the situation of paying material & service portiion in single invoice. Party has raised invoice for total value including & service amounted to Rs:2,00,000/-(Material supply - 187500 + Service charge - 12500/-) and tax charged @ 10.3% on 200000/- is Rs:20600/- net bill value is Rs:2,20,600/-

Company has kept the payment hold stating he has to raise ST on invoice for Rs.2,00,000/33%=66,000/-  amounted to 66000*10.3% = 6,798/-

Pls clarify why can not we accept the invoice value for Rs:2,00,000/- as assessable value. & in abatement, is there any requirement from non claiming of input tax from sub-contractor.

if possible, anybody pls explain the abatement clause very detaily.

 

Regards

DNK

Replies (2)

 

You have to book this expense after availing abatement.......... 

If you are claiming abatement on your out put services under notification 1/2006 then you would not be entitled to claim the credit on your input serivces hence your entire amount of service tax of Rs.20600 would become your cost, in the alternative case your cost would be only 6798.

If you do not claim abatement on your output services then there is notihing wrong in claiming input service tax credit of Rs.20,600. This credit would be available even if you are reducing the material cost to derive the value of your out put services under notification 12/2003.

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