Construction business

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2011 Dear Experts,

A Co. HAS business of construction of commercial property. It provides all the material and sub contracts the labour work to another contractor.

How will the liability of service tax, wct, and tds will be followed if :

1) Co shows cost of material in the bill raised by it separately along with the service profit for the contract ,

2) Co raises bills as consolidated .

Thnx in adv

Juhi

Juhi (Expert)
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05 June 2011 Well as far as TDS is concerned, the liability is there in all cases.

WCT is deducted only is bill is consolidated ie involves both material and labour. The rates and applicability is to be seen in the local Sales Tax Act.

Lastly as far as service tax is concerned if bill are separate company has to charge at full rate on labour portion while in case of consolidate bill abatement shall be applicable. Here again 25 % and 33 % shall be there depending on whether value of land is taken or not (if value of land is included abatement shall be 25%)

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)
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06 June 2011 As long as the contract involves materials and labor, it is taxable under works contract. If value of materials and labor are separable, service tax is payable on labor element only. If separation is not possible, composition scheme may be opted under which 4.12% tax is payable on gross contract amount. Abatement scheme may not be available for works contracts.

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