29 June 2013
WORKS CONTRACT SERVICE AFTER 1ST JULY Definition of service (64B)(44) In proviso it is written transfer of mere title in goods by way of sale/gift also any deemed sale u/s 366-(29A) is not taxable here.. Means vat portion not taxable only service portion taxable. In divisible contract = only service portion taxable in Indivisible contract = If 366(29A) = goods portion to be calculated differently. Others = check the dominant nature of transaction. If service dominant st. Declared service (66 E) Point (h). Clearly mentioned that service portion in execution of a work contract. Negative list (66 D) Nothing Mentioned.. Mega exemption 25/2012 Entry No. 12(to govt.)/13(road/bridge etc)/14(single residential unit)/29(sub contractor to another contractor who provides exempted services) 26/2012 Abatements Nothing Mentioned.. STVR,2006 FA12, Rule 2-A, option 1.: computation method Value of Service = GAC-Value of property in goods [GAC does not include Sales Tax. a.)Value of Goods = Actual Value On which Sales tax paid/payable b.)value of Work Contract = All contract related cost + related profit] Option 2: abatement method following % of total amount charged is taxable In case of original contract 40% In case of MRRR of any GOODS 70% Other than above two( eg: glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property) 60% Remaining is abatement.. Total amt charged is Gross Amt Charged +FMV of all goods & services given by SR in relation to that – Amount charged by SR for the same including vat if any. (this is done because to save s.tax SP say to SR u give all the material and service amt is less) 68(2) reverse charge Generally SP In certain cases : Service Portion in work contract : SP 50% & SR 50% Where SP is indi, huf , p.firm,AOP and SR is Body corporate CCR For rule 2A explanation 2 Input Capital goods input service
- Work Contract Meaning 65B(54): WC means a contract wherein transfer if property in goods involved in the execution of such contract is leviable to tax as sale of goods AND such contract is - for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any Movable or Immovable property OR - for carrying out any other activity or a part thereof in relation to such property. In nut shell (composite + indivisible) eg. Labour cum material contract of Repair of building/tv/motorvehicle Eg. AMC (valuation using option2 as generally payment in advance) when AMC of goods 70% of the Total amt charged when AMC of Immovable property = 60% of the Total amt. charged
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