We are registered as a private limited company and undertake interior works for corporates. At what rate should we charge service tax? What should be the rate for VAT? (Will it be for balance amount or as per VAT guidelines)
As per Rule 2A of service tax, ST shall be payable on 70% of amount charged under works contract for maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property.
While VAT guidelines in each state varies. For example Andhra Pradesh / Telangana the AP VAT Rules2005 Clause 17 mentions that only 30% of total cost can be deducted and for balance VAT is to be charged
This implies that both ST & VAT (for AP) is to be charged for 70% of the amount charged under works contract (hence for a total of 140% of the amount)
Is our understanding correct or is there a better method to apply the above taxes. Please advice
Thanks in Advance
George
CAclubindia
