29 September 2011
Applicability of VAT & Service Tax
Mr.X is in the business of manufacturing/providing furniture as per customer specification at customer location.(e.g.office furniture, kitchen trolley)
1) As to apply for MVAT registration: a) How his turnover(Rs. 5 Lac) will be determine, being Material & Labour Involve? b) Whether it constitute as work contract? Or only sale of material? c) Whether Vat input can be taken on Invoices prior to Application for VAT? d) Whether invoice upto 5 lac turnover be revised with adding Vat portion?
2) As to apply for Service Tax registration: a) How the turnover (Rs. 10 Lac) will be determine, being Material & Labour Involve? b) Whether it constitute as work contract? Or only sale of material? c) Whether service tax input can be taken on Invoices prior to Application for registration?
29 September 2011
Mr. Amol, Please find the replies as follows: 1) (a) Total rceipts,including labour and material.(b)Providing interior decoration,furniture and fixtures is a works contract.(c)No (d)No.....MJK
In case of 1)(a)total receipt-you mean to say total invoicing? 1) (e) whether it should be clasified under Interior decorater service or works contract service? 1) (f) deciding the turnover of sales Rs.5 lac-Under MVAT act sales meance-Transfer of property in goods involved in execuation of works contract. And under works contract value of goods can be determine as 75% of Total contract value. Thus if sales cross Rs.6.66 lac then the vatable portion will be Rs.5 lac, accourdingly we can apply for MVAT registration when sales cross Rs.6.66 lac.
Also not clared about applicability of service tax..
30 September 2011
Mr Amol, 1(a)It is the total invoicing,exemptions on labour come later. 1(e) Iterior decoration and fixing of furniture and fixtures,such as partions,cabinets, shelves etc is itself a works contract. 1(f) Yes, the total turnover means the total amount rceived as consideration towards transfer of property in goods.But the authorities generally create problem without going to the exact interpretation of the law. The Service tax applicable on the labour charges only. In this case ,I think, it is exempt as the amount is low. MJK
As regard service tax following are some of queries:
How to interpret the following a) & b)- Who should get registration under service tax? a) Every person liable for paying the service tax within 30 days from the date on which service tax is levied or within 30 days from the date of commencement of business, whichever is later.
b)Every service provider whose "aggregate value of all taxable services" in a financial year from one or more premises exceeds Rs. 9 lakhs.
I) If one has started the business of providing taxable service but the aggregate value of all taxable services does not exceeds Rs. 9 lakhs, wether he is required to get registration as per para a) above? if yes then- what is the purpose of para b)?
II) If one has register under service tax what is the meaning of following exemption? C) Exemption scheme for small service providers – Minimum/threshold limit of Rs. 10 lakhs. Whether it means that a service provider have service tax number need not charge/collect service tax on services invoices upto Rs.10 lac subject to non utilisation of input credit?
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