Reverse charge
This query is : Resolved
04 March 2015
how to compute exemption limit of 10 lakhs in case of works contract where service provider is liable to 50%
05 March 2015
Law : Service tax is required to be paid on all services except those mentioned in the negative list. However, a SSP has an option to claim an exemption in case if the value of all the taxable services is not more than 10,00,000.
For a works contract transaction, 50% service tax is required to be paid by service provider and 50% service tax is required to be paid by service recipient. Hence, the value which is arrived on which tax can be levied,
1. in case of availment of abatement or 2. in case of non availment of abatement
is to be considered in the exemption limit of RS. 10,00,000.
For a works contract transaction, 50% service tax is required to be paid by service provider and 50% service tax is required to be paid by service recipient. Hence, the value which is arrived on which tax can be levied,
1. in case of availment of abatement or 2. in case of non availment of abatement
is to be considered in the exemption limit of RS. 10,00,000.
05 March 2015
In case of works contract, valuation is governed by rule 2A of ST(Determination of value) rules, 2006.
Let's take following example of "original works" to understand the same.
Where material & labour are not bifurcated:
Total agreed amount with customer- Rs. 15 Lakhs.
However, by virtue of rule 2A, the taxable value of service comes to Rs. 6 Lakhs(i.e. 15 lakhs X 40%).
Hence, even though contract amount exceeds Rs. 10 lakhs, but since the taxable value is less than Rs. 10 lakhs, no service tax shall be payable by service provider (subject to other conditions prescribed under N/N 33/2012-ST).
To conclude, the taxable value( even for purpose of Rs. 10 lakhs) shall be as post application of prescribed percentages (i.e. 40%/70%).
Let's take following example of "original works" to understand the same.
Where material & labour are not bifurcated:
Total agreed amount with customer- Rs. 15 Lakhs.
However, by virtue of rule 2A, the taxable value of service comes to Rs. 6 Lakhs(i.e. 15 lakhs X 40%).
Hence, even though contract amount exceeds Rs. 10 lakhs, but since the taxable value is less than Rs. 10 lakhs, no service tax shall be payable by service provider (subject to other conditions prescribed under N/N 33/2012-ST).
To conclude, the taxable value( even for purpose of Rs. 10 lakhs) shall be as post application of prescribed percentages (i.e. 40%/70%).
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Tds on building rent monthly
- GST ON EXPORT COMMISSION
- Should I report my US salary for January, February, March in Schedule FA?
- RCM INVOICING FROM NOV-2024
- Sale of property furniture sale
- Confusion around Form 26QB fields
- Adjustment entry in the case of Individual and HUF on 31st March
- Stock difference tax applicable on composite rate or normal rate
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
