How to calculate ser.tax on works contract

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arun jivrajani (Querist)
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19 May 2014 MY CLIENT HAVE A WORKS CONTRACT AT TPS SIKKA - JAMNAGAR FOR ELECTRIC MOTOR REWINDING SO THE ACCOUNT OFFICER I CALCULATE MATERIAL 20% AND LABOUR CHARGES IS 80% BUT THEY HAVE NO CERCULAR OR ANY WRITING MATERIAL FOR THIS PROCEDURE SO I CONFUSED ABOUT HOW TO CALCULATE THIS WORK THAT HOW MANY % OF LABOUR & HOW MANY % IS MATERIAL PL SPECIFY

Anshul Jain

Anshul Jain (Expert)
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19 May 2014 In case the contract is a bundled contract i.e. the rate for the contract is a composite rate, then it qualifies as works contract. in case the rates are separate for labor and material components service tax shall be liable @ 12.36% on the labor content only.

In case it is a works contract you should refer to notification no 24/2012 ST in order to understand your category of works contact and calculate tax accordingly. In my opinion it should fall under original works with 60% abatement on the total consideration i.e. 40% tax rate without segregating the labor and material parts.