The Service Tax liability on Works Contract after July
1, 2012 is summarised as follows:
Value of
Works contract for Service tax =
Gross amount received – Value of goods
transferred in the execution of works contract
Condition
|
Value of Service
Tax
|
Remarks
|
If Registered under VAT & returns filed
|
·
Value of Service = Gross amount received – Amount for which VAT
is paid (amount declared in VAT return as turnover)
|
Easy way
|
Otherwise
|
||
a) if value of materials & Value of service is separately
identifiable
|
·
Value of Services = Labour
charges + paid to sub-contractor for labour + charges for planning/ designing
/ architect fee + machinery /equipment hire + Cost of consumables (water,
electricity, fuel etc) + Proportionate establishment expenses relating to service
+ proportionate profit relating to service
|
It is difficult to arrive at this value
|
b) If value of materials are NOT separately known
|
·
In case of ORIGINAL WORKS*
Value of Service = 40% of the Gross Amount received
|
|
·
In case of Repairs of any
goods (movable) Value of Service = 70% of the Gross Amount received
|
||
·
In any other case Value
of Service = 60% of the Gross Amount received
|
In any case, CENVAT Credit cannot be taken.
* Original work means
·
any new construction
·
any additions or
alterations to abandoned or damaged structure for making them workable
·
Erection commissioning
or installation of plant, machinery or equipment or structures
The Service Tax calculated above will be paid as follows:
If Service
Provider is a
|
If Service
Receiver is a
|
Service tax is
payable by
|
Ratio
|
|
Individual, Proprietary Firm, Partnership Firm
|
Company
|
Service Provider
|
Service Receiver
|
50% : 50%
|
Other than Company
|
Service Provider
|
100%
|
||
Government or Local authority
|
Any person
|
Service Receiver
|
100%
|
|
Other than above
|
Any person
|
Service Provider
|
100%
|
|
Note: If Service tax liability is payable by both the
parties, the amount payable by respective parties should be separately shown in
the invoice.
