Anil Yadav (Finance & Accounts Manager) 17 December 2016
We are Pvt Ltd company. we have given contract of new construction work (Boundary wall building of land) to Individual contractor. In this regards he is not mentioning any type of Tax on his Invoice and we also deduct TDS, WCT & Labour cess as well then pay rest amount to him. Please suggest if service tax is applicable in above contract. If yes then who is liable for the same and is there any abatement also.
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Dhirajlal Rambhia (KVO Merau Kutchh) 17 December 2016
Under RCM you are required to pay 50%, of the service tax liable over works contract, being original work, service is charged over 40% of total contract.
Thus, your ST liability would be 0.5*(0.4*15) = 3%.
Anil Yadav (Finance & Accounts Manager) 19 December 2016
Thanks Sir for Valuable Input.
Sir, Please also suggest If contractor is claiming that he will collect 6% Service tax on total Invoice Raised by him from us and deposit the same.
Then we as a pvt ltd company (in construction business) is liable for any payment of ST. and we don't have service tax registration also.
Dhirajlal Rambhia (KVO Merau Kutchh) 19 December 2016
Under REVERSE CHARGE MECHANISM its reseponsibility of service receiver to comply to its duty. Even though department will gets its due, but notice would be served for your complience!