Works contract question

1038 views 2 replies

In Works Contract there are three types of works contract Original, Maintenance & Other works.
1.    In case of original works contract (New Construction) service tax shall be payable on 40% of the total amt charged for the works contract.
2.    In case of maintenance & repairs works contract (servicing of any goods) Service tax shall be payable on 70% of the total amt charged for the works contract.
3.    In case of other works contract (Electrical & Fittings) Service tax shall be payable on 60% of the total amt charged for the works contract.

 

My Question: If a builder has simply constructed the structure, under which category will the same be? Note that Electrical and furniture fittings, interior designing etc. will be done by some other person. Will it be 'Original Works', 'Maintenance and Repair's or 'Other Works Contract'?

Replies (2)

Dear Yashsr,

It will be fall under Original Works. Definition is attached for your reference:

(a) “original works” means-

(i)    all new constructions;

(ii)   all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

(iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; 

Hope it useful to you.

Second Clause of Maintenance & Repairs works contract is only applicable to 'any goods'. Hence not applicable in your case. In your query, builder is only constructing the structure. It is a New Construction and would wall in Original Works and Service Tax will be payable on 40% of the amount charged.

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