16 August 2012
As per Service Tax (Determination of value) Rules,2006 Consideration of value under works contracts Now Composition rate of service tax @4.994%. The same has been how its come out from original work 40%. And now its only 4.994% or any other rates relavant under composition. please clarify as brief
16 August 2012
Please note that the composition rate is abolished. You have to follow the valuation rules under 2A.
After arriving the contract value, you have to deduct the material cost as shown in the VAT Return and you will get the taxable turnover and after the taxable turnover 50% of the taxable turnover attracts service tax 12.36% of the taxable turnover. And balance 50% of the taxable turnover, tax will be remitted by the service receiver under reverse charge mechanism.
The Rule also specifies that if you are not able to find out the material cost, 40% is the taxable turnover for new construction on the total value. You have to pay 50% of the Bill value as mentioned above. Please refer all the relevant notifications issued in the month of June 2012.
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