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Service Tax on construction

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Bharat

Accounts Manager

25 Points Posted on 10 September 2010

Dear Sir / Madam

My self Bharat Prajapati, Accounts Manager of Bhumi Construction. At present we received a Contract from ONGC Ltd. regarding construction of Auditorium for the purpose of ONGC staff. it is a tunkey project. i have some doubt on following question.

1) Is Service Tax applicable on construction of auditorium building?

2) The ONGC will hold our 12.36% of service tax from bill if we will not paid service tax is it right?

3) The ONGC hold 12.36 % instead of 10.30% due to the whenever tender prepared the rate of service tax was 12.36% if we paid service tax @ 10.30% they hold 2.06% of difference from our bill, is it right?

you are requested to solve my query at the earliest.

Bharat Prajapati

Replies (1)

Ankit Singla

B.Com (Hons.) CA

88 Points Posted on 16 September 2010

hi bharat

Case 1

Service tax is applicable @ 10.3% if u r supplying the labour only for construction
If u r using your material and also supplying the labour then WCT is charged @ 4%

Case 2

it depends on the contract b/w u & ONGC

But look if ONGC will hold ur payment then how can u pay the service tax as service tax is paid on the payment received on services done.

Case 3

Service tax is liable only on the receipt of payment, therefore service tax @ 10.3% should be charged.

No ONGC has no right to hold 2.06%

Also U r liable for service tax not ONGC so matter of payment or how much is paid is related to u

If u r paying less then u will be liable for penalty not ONGC