21 February 2008
My client is a pvt. ltd. co.. One Mr. S received a contract from Indian Oil for industrial construction. Mr. Singh in turn contracted out the work to our client. In this work, we had to use materials and labour on our cost and bear all other related expenses, Mr. S gave us a lump sum amount for carrying out the work. After the work is completed we raise the bill on Mr. S. the billed amount includes material cost, labour cost etc., but this break up (i.e. what % is material cost, what % is labour cost etc.) is not shown.
Sir, the query is that should we charge Service Tax on the bill raised to Mr. S, and if yes then at what rate.
Sir, we charge a single bill on the work. Is the composite scheme where Ser tax @ 2% is charged applicable.
Service tax would be applicable if you cross the threshold limit of 8 Lakhs.
If it has crossed 8 Lakhs in the previous financial year on account of any services then yes service tax will be liable under the head "Commercial or Industrial Construction Service".
Second inquiry
There are three options available under the above services and one is as stated by you.
The option can be exercised and is applicable to individual contract.
You may kindly evaluate your position in view of the above clarification
CAclubindia
