Service tax credit on factory building
This query is : Resolved
01 October 2015
We are a private limited company and got constructed a factory building from a proprietor concern .The service provider has given his bill including material cost and charged sales tax on the whole amount.
Is service tax payable on the transaction?. If yes what is the tax pattern?.In case service tax is payable, Can we take credit of such service tax paid?
Kindly support your reply with relevant notification number.
Is service tax payable on the transaction?. If yes what is the tax pattern?.In case service tax is payable, Can we take credit of such service tax paid?
Kindly support your reply with relevant notification number.
01 October 2015
Yes the service tax is payable on the transaction since it is a transaction of works contract wherein there is transfer of property in goods and provision of construction service.
Factory building being original works, service tax is applicable on 70% of the total value.
The availavilty of input credit would require analysis of section 2(k) of the cenvat credit rules, 2004.
Request you to provide us the exact details of the construction.
Factory building being original works, service tax is applicable on 70% of the total value.
The availavilty of input credit would require analysis of section 2(k) of the cenvat credit rules, 2004.
Request you to provide us the exact details of the construction.
02 October 2015
Service tax shall be applicable on 40% of the value.
I stand corrected.
I stand corrected.
03 October 2015
Value of service portion in the execution of a works contract��shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract.
Here gross amount shall not includes sales tax or VAT paid or payable on the transfer of property in goods .
If the service portion cannot be determined as mentioned above ST has to be paid on 40% of the total amount charged for the works contract ie, 40% shall be treated as service portion.
Regarding CENVAT credit, SPand SR reside in taxable territory, partial reverse charge aaplicable. In this case, credit of tax paid by the service recipient under partial reverse charge scheme would be available only after making payment of value of input service to the service provider and payment of service tax to the Central Government. The said credit would be available on the basis of the tax payment challan.
03 October 2015
Both SR & SP are in taxable territory. I think as the SP is an individual, he has to charge Service tax on 20% value and SR has to pay on balance 20%. Can i take credit of both?
03 October 2015
Yes . you are correct . 20% by SP and 20% by SR. Yes you can take credit of both
03 October 2015
Yes . you are correct . 20% by SP and 20% by SR. So total 40%.
Yes you can take credit of both
Yes you can take credit of both
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