Hi,
can a vendor raise seperate bills; i.e. 90% of value as materials and charge VAT on the same, and 10% as service portion and charge 12.36% on the same and hence not include the same under the head Works Contract as per Service tax.? there is a lump sum contract given to the vendor for renovation of new office. is it mandatory to charge it as per reverse charge mechanism or he can charge at normal rate of 12.36% if he is raising a seperate bill?
Thanks
If vendor can segregate the portion of value of goods in which ownership is transferred and value of service provided then he can raise two separate bills as per your suggestion.
If you know, the value of Materials, charge separate invoice with materials + VAT and value of service + service tax.
If not, it has to be billed in a single invoice. [90% + 10%]
Correct me if i'm wrong.
Dear Sekar, You are right
But my question is what would be the rate of Service tax if separate bill is raised? will it be 12.36? or 50% of (12.36*40%) as in case of Works contract (original/new contracts)
Dear Monica, In your case Service Tax will be levied at full rate i.e.12.36%. But RCM shall be applicable because it is case of works contract so you are to charge ST @ 6.18% from service receiver and service receiver will pay ST @ 6.18% under RCM.
M N Rao & Associates LLP
Vijayawada
CA Inter
View Details
Krea University
Chennai
CA
View Details
ADY & CO.
New Delhi
Graduate (Any)
View Details
CCI
Pro
CAclubindia
