Work contract service

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Ram kr.

Buisness

490 Points Posted on 21 December 2012

Our company have given a contract to a Contractor for constructing a Factory building including some material provide contractor and balance provide by owner which is not included in contract value. He charged bill amount Rs. 100/- including own material. He charged service tax @ 12.36% on Rs. 40/- but owner's gave him Rs. 100/- material. Will we assess service tax on Rs. 80/- (40% of value 100+100)or Rs.40/- (40% of value 100)in which 6.18% is payable by Contractor and balance 6.18% is payable by owner. Am i write. Pl. advice.

Thanks

Replies (2)

Manoj Agarwal

Service Tax Consultant Rourkela Service

2755 Points Posted on 30 December 2012

W.e.f. 01-07-2012, the service provider and receiver are liable for 50% of tax each on service tax portion under the reverse charge vide notification no. 30/2012. Assuming you have claimed abatement of 60% towards supply portion, bill should be as follows:

Supply of Material = Rs. 60

Add: VAT @ 5% = Rs. 3

Service Charges = Rs. 40

Add: ST @ 6.18% = Rs. 2.472

Total Bill = 105.472

Note: The balance 50% service tax i.e. Rs. 2.472 is to be directly paid by the service receipient.

The VAT rate is assumed.

Madhukar N Hiregange

Chartered Accountant

33545 Points Posted on 31 December 2012

The FOC supply wouldbe liable to included while calcuating the ST unless Rule 2A of the valuation rules are applied where the actualmaterialis deducted.

Addtional tax of 5% wouldbe demanded at the time of audit