Works Contract Service, Service Tax

[SANDESH SHINDE]

Dear Sir,

Please explain us whether Service provider can charge Service tax 50% i.e 7% on full value and 50% under not any category i.e 40% or 70% of works contract service i.e 7% service tax liability of us as a Service receipent. Therefore please explain us whether he has rightly charged. Pls give us any references regarding this. Thanks & regards.

Posts / Replies

[ganeshan kalyani]

The service tax liability of service provider on works contract service is 50% and balance 50% is payable by receiver of the service. Let me explain, in case of original works contract service the service portion in value of contract is 40% and in case of other than original works is 70%. The service tax shall be calculated as - 40% of value of contract and on that 14% service tax and on 50% is payable by service provider and balance 50% by service receiver.

[SANDESH SHINDE]

Dear Sir,

Thanks for your reply, but if the Service provider is not considering any 40% or 70% of works contract service. In case of AMC He is just charging 50% of 14% i.e 7% his Service Tax portion and balance 50% of 14% i.e 7% Service tax rate to be paid by us as service receipent.Therefore please explain us whether it is correct. He is not charging any Vat.Thanks & Regards

[vasudevan unnikrishnan]

For AMC tax on 70% of gross value need be paid.Even in case ,where service provider has not charged so,as service recipient, you can follow this valuation and 50% of that only to be paid under reverse charge.payment in cash,not by cenvat. Credit can be taken also.