Abatement on s.tax

This query is : Resolved

Asif Ali (Querist)
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07 May 2012 In a work contract, If the work contract value is Rs. 100 and Vat is 4 %. Tell me how we calculate abatement and whether the Vat rate should also be abated

CA Nikhil Jhanwar

CA Nikhil Jhanwar (Expert)
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07 May 2012 In Works Contract you have two options

(i) Either deduct the value of goods involved in the execution of works contract and pay service at normal rate of 12% on service portion only

(ii) Or pay service tax at the rate of 4.8 % under Composition Scheme on whole value of Rs. 100 (assuming that Rs. 100 is the whole contract value)

As regards, VAT in both the case VAT amount shall not included in value of taxable service

Asif Ali

Asif Ali (Querist)
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08 May 2012 But I am talking about the abatement i.e you get 67% abatement on Work contracts.

My query is related to deduction of abatement

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Ki$hor B

Ki$hor B (Expert)
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08 May 2012 Total value (Material + Service) 100
Less: Abatement 67% (as mentioned by you)
Amount on which Vat to be levied 33

Above applicable if no proper records are maintained to bifurcate the material & service component of the bill.

Ki$hor B

Ki$hor B (Expert)
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