Service tax liability on wct

420 views 4 replies
We(company) are deducting WCT (as per rajasthan sales tax) 6 % , on work contract . does service tax liability also arise on wct amount or only on work contract amount less wct amount to be deducted.
Replies (4)

Presumably you are paying the composition method of paying 6% VAT on the whole value of WC as you are unable to determine the actual value of materials transferred/ involved.

However for some time- ( 2007 onwards) the fact that there is a service component has been established by courts.

The options for payment of ST are as under: 

1. Deduct the actual value of material involved. If balance is less than 10 lakhs cliam the exemption. Beyond that pay ST on the balance after deducting the value of material.

2. If not determinable examine exemption as a small service. If eleigible claim. Beyond that pay ST on 40% on the original construction or 70% on others 

 

I think I missed the question. You are deducting the WCT from the contractors bill.

As far as ST is concerned, if you are a corporate and provider is not a body corporate- then you need to pay under partial reverse charge 50% of the ST. This is irrespective of the fact whether the contractor has charged ST or not.

 

Thanks sir But my question is - Our company is liable to deduct and pay service tax under RCM on work contract (suppose 100 rs ) . Work contract is provided by individual.

As per Rajasthan sales tax act payer is liable to deduct and pay work contract tax 6 % (suppose rs 6 on rs 100).

My question is whether we are to calculate service tax on rs 100 or rs 94 (100-6).

 

 

There is no Need to pay service tax on the portion representing vat and vice versa as the same doesn't represent the amount for carrying out the activity but is representing tax for carrying out the activity!

If the base value for calculating vat and service tax are not same(and the price is all inclusive), u need to apply simultaneous linear equation to make sure that there is no vat on st and vice versa!


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register