Difference between 4.12% and 12.36% on 33%

This query is : Resolved

Rajkumar (Querist)
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05 January 2009 Good Afternoon,

My name is Rajkumar. I have completed my MBA with finance specialtion.

I would like know the "what is the distungish between the service tax collecting 4.12% and 12.36% on 33% of invoice value.How they are measure to collect this service tax and what basis?"

So please provide your valuable answer.

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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05 January 2009 In some type of services, department has provided abatements on %s basis like works contract where material and services are INCLUSIVE there is an abatement of 2/3 (means 66.666666666%)

Some service providers are calculating service tax by direct method that is service tax rate multiplied by taxability percentage which in above case is 1/3

like 12.36*1/3 = 4.12%

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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05 January 2009 Suppose there is a works contract of 100/-.
Now, in service tax there is abatement of 67%(adhoc of material value).
So labour value =(100-67)= 33 * 12.36% = 4.12 or alternatively u can charge 4.12 on 100 = 4.12.

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