How to solve this
This query is : Resolved
10 November 2010
We execute interior work. Our client wants to charge them with service tax only on the 33% of the value ie.,availing abatement. Since we are doing only finishing and completion work we are not eligible for the abatement. Our client further says that their system will accept billing only with abatement (10.3% on 33% or 4.12% (Works Contract Services) with service tax shown separately in the invoice. But we can charge them only on the gross value with ST @ 10.3% How do we prepare the invoice. Kindly guide us.
10 November 2010
Lakshmi,
Whether the Service Tax registration is for Commercial or Industrial construction service?
Then only you are eligible for 33:67 proporation /rule.
Since you are clearly stating that its only finishing & completion work, you are not eligible to get the benefit of the same as per the 1/2006 notification.
Kindly gothrough the Service tax notification no.1/2006 dated 01.03.2006.
FYI,
Notification New Delhi, the 1st March, 2006.
No. 1/2006-Service Tax 10 Phalguna, 1927 (Saka)
G.S.R. (E). ¾ In exercise of the powers conferred by sub-section (1) of section 93 of
the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central
Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts
the taxable service of the description specified in column (3) of the Table below and specified in
the relevant sub-clauses of clause (105) of section 65 of the Finance Act, specified in the
corresponding entry in column (2) of the said Table, from so much of the service tax leviable
thereon under section 66 of the said Finance Act, as is in excess of the service tax calculated on a
value which is equivalent to a percentage specified in the corresponding entry in column (5) of
the said Table, of the gross amount charged by such service provider for providing the said
taxable service, subject to the relevant conditions specified in the corresponding entry in column
(4) of the Table aforesaid:
Table
S.
No
Subclause
of
clause
(105) of
Section
65
Description of taxable
service
Conditions Percentage
(1) (2) (3) (4) (5)
1. (m) (1) The use of mandap,
including the facilities
provided to the client in
relation to such use and
also for the catering
charges.
(2) Taxable service
provided by a hotel as
mandap keeper in such
cases where services
provided include catering
services, that is, supply of
food alongwith any service
in relation to use of a
mandap.
This exemption shall apply only in
such cases where the mandap
keeper also provides catering
services, that is, supply of food and
the invoice, bill or challan issued
indicates that it is inclusive of the
charges for catering service.
The invoice, bill or challan issued
indicates that it is inclusive of
charges for catering services.
Explanation.- The expression
“hotel” means a place that provides
boarding and lodging facilities to
public on commercial basis.
60
60
2. (n) (a) Services provided in
relation to a tour, by a tour
operator, -
(1) where the tour operator
provides a package tour;
(2) where the services
provided are other than in
relation to a package tour.
The bill issued for this purpose
indicates that it is inclusive of
charges for such a tour.
The bill issued indicates that the
amount charged in the bill is the
gross amount charged for such a
tour.
40
Explanation.- The expression
“package tour” means a tour in
which the provisions for
transportation and accommodation
for stay of the person undertaking
the tour has been afforded by the
tour operator.
(b) Services provided in
relation to a tour, if the tour
operator is providing
services solely of arranging
or booking accommodation
for any person in relation to
a tour.
(i) The invoice, bill or challan
issued indicates that it is towards
charges for such accommodation,
and
(ii) this exemption shall not apply in
such cases where the invoice, bill or
challan issued by the tour operator
to the client only includes the
service charges for arranging or
booking accommodation for any
person in relation to a tour and does
not include the cost of such
accommodation.
10
3. (o) Renting of a cab. - 40
4. (zc) Holding of a convention,
where service provided
includes catering service.
The gross amount charged from the
client is inclusive of the charges for
the catering service.
60
5. (zzd) Erection, commissioning or
installation, under a
contract for supplying a
plant, machinery or
equipment and erection,
commissioning or
installation of such plant,
machinery or equipment.
This exemption is optional to the
commissioning and installation
agency.
Explanation.- The gross amount
charged from the customer shall
include the value of the plant,
machinery, equipment, parts and
any other material sold by the
commissioning and installation
agency, during the course of
providing erection, commissioning
or installation service.
33
6. (zzp) Transport of goods by road
in a goods carriage.
- 25
7. (zzq) Commercial or industrial
construction service.
This exemption shall not apply in
such cases where the taxable
services provided are only
completion and finishing services in
relation to building or civil
structure, referred to in sub-clause
(c) of clause (25b) of section 65 of
the Finance Act.
Explanation.- The gross amount
charged shall include the value of
goods and materials supplied or
provided or used by the provider of
33
the construction service for
providing such service.
8. (zzt) Catering. This exemption shall apply in cases
where,-
(i) the outdoor caterer also provides
food; and
(ii) the invoice, bill or challan
issued indicates that it is inclusive
of charges for supply of food.
50
9. (zzw) Services in relation to
pandal or shamiana in any
manner, including services
rendered as a caterer.
This exemption shall apply only in
cases where,-
(i) the pandal or shamiana
contractor also provides catering
services, that is, supply of food; and
(ii) the invoice, bill or challan
issued indicates that it is inclusive
of charges for catering service.
70
10. (zzzh) Construction of complex. This exemption shall not apply in
cases where the taxable services
provided are only completion and
finishing services in relation to
residential complex, referred to in
sub-clause (b) of clause (30a) of
section 65 of the Finance Act.
Explanation.- The gross amount
charged shall include the value of
goods and materials supplied or
provided or used for providing the
taxable service by the service
provider.
33
Provided that this notification shall not apply in cases where, -
(i) the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of
service tax on input services, used for providing such taxable service, has been
taken under the provisions of the CENVAT Credit Rules, 2004; or
(ii) the service provide r has availed the benefit under the notification of the
Government of India in the Ministry of Finance (Department of Revenue), No.
12/2003-Service Tax, dated the 20th June, 2003[G.S.R. 503 (E), dated the 20th
June, 2003].
Explanation.- For the purposes of this notification, the expression “food” means a substantial and
satisfying meal and the expression “catering service” shall be construed accordingly.
[F. No. 334/3/2006-TRU]
(G. G. Pai)
Under Secretary to the Government of India
Whether the Service Tax registration is for Commercial or Industrial construction service?
Then only you are eligible for 33:67 proporation /rule.
Since you are clearly stating that its only finishing & completion work, you are not eligible to get the benefit of the same as per the 1/2006 notification.
Kindly gothrough the Service tax notification no.1/2006 dated 01.03.2006.
FYI,
Notification New Delhi, the 1st March, 2006.
No. 1/2006-Service Tax 10 Phalguna, 1927 (Saka)
G.S.R. (E). ¾ In exercise of the powers conferred by sub-section (1) of section 93 of
the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central
Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts
the taxable service of the description specified in column (3) of the Table below and specified in
the relevant sub-clauses of clause (105) of section 65 of the Finance Act, specified in the
corresponding entry in column (2) of the said Table, from so much of the service tax leviable
thereon under section 66 of the said Finance Act, as is in excess of the service tax calculated on a
value which is equivalent to a percentage specified in the corresponding entry in column (5) of
the said Table, of the gross amount charged by such service provider for providing the said
taxable service, subject to the relevant conditions specified in the corresponding entry in column
(4) of the Table aforesaid:
Table
S.
No
Subclause
of
clause
(105) of
Section
65
Description of taxable
service
Conditions Percentage
(1) (2) (3) (4) (5)
1. (m) (1) The use of mandap,
including the facilities
provided to the client in
relation to such use and
also for the catering
charges.
(2) Taxable service
provided by a hotel as
mandap keeper in such
cases where services
provided include catering
services, that is, supply of
food alongwith any service
in relation to use of a
mandap.
This exemption shall apply only in
such cases where the mandap
keeper also provides catering
services, that is, supply of food and
the invoice, bill or challan issued
indicates that it is inclusive of the
charges for catering service.
The invoice, bill or challan issued
indicates that it is inclusive of
charges for catering services.
Explanation.- The expression
“hotel” means a place that provides
boarding and lodging facilities to
public on commercial basis.
60
60
2. (n) (a) Services provided in
relation to a tour, by a tour
operator, -
(1) where the tour operator
provides a package tour;
(2) where the services
provided are other than in
relation to a package tour.
The bill issued for this purpose
indicates that it is inclusive of
charges for such a tour.
The bill issued indicates that the
amount charged in the bill is the
gross amount charged for such a
tour.
40
Explanation.- The expression
“package tour” means a tour in
which the provisions for
transportation and accommodation
for stay of the person undertaking
the tour has been afforded by the
tour operator.
(b) Services provided in
relation to a tour, if the tour
operator is providing
services solely of arranging
or booking accommodation
for any person in relation to
a tour.
(i) The invoice, bill or challan
issued indicates that it is towards
charges for such accommodation,
and
(ii) this exemption shall not apply in
such cases where the invoice, bill or
challan issued by the tour operator
to the client only includes the
service charges for arranging or
booking accommodation for any
person in relation to a tour and does
not include the cost of such
accommodation.
10
3. (o) Renting of a cab. - 40
4. (zc) Holding of a convention,
where service provided
includes catering service.
The gross amount charged from the
client is inclusive of the charges for
the catering service.
60
5. (zzd) Erection, commissioning or
installation, under a
contract for supplying a
plant, machinery or
equipment and erection,
commissioning or
installation of such plant,
machinery or equipment.
This exemption is optional to the
commissioning and installation
agency.
Explanation.- The gross amount
charged from the customer shall
include the value of the plant,
machinery, equipment, parts and
any other material sold by the
commissioning and installation
agency, during the course of
providing erection, commissioning
or installation service.
33
6. (zzp) Transport of goods by road
in a goods carriage.
- 25
7. (zzq) Commercial or industrial
construction service.
This exemption shall not apply in
such cases where the taxable
services provided are only
completion and finishing services in
relation to building or civil
structure, referred to in sub-clause
(c) of clause (25b) of section 65 of
the Finance Act.
Explanation.- The gross amount
charged shall include the value of
goods and materials supplied or
provided or used by the provider of
33
the construction service for
providing such service.
8. (zzt) Catering. This exemption shall apply in cases
where,-
(i) the outdoor caterer also provides
food; and
(ii) the invoice, bill or challan
issued indicates that it is inclusive
of charges for supply of food.
50
9. (zzw) Services in relation to
pandal or shamiana in any
manner, including services
rendered as a caterer.
This exemption shall apply only in
cases where,-
(i) the pandal or shamiana
contractor also provides catering
services, that is, supply of food; and
(ii) the invoice, bill or challan
issued indicates that it is inclusive
of charges for catering service.
70
10. (zzzh) Construction of complex. This exemption shall not apply in
cases where the taxable services
provided are only completion and
finishing services in relation to
residential complex, referred to in
sub-clause (b) of clause (30a) of
section 65 of the Finance Act.
Explanation.- The gross amount
charged shall include the value of
goods and materials supplied or
provided or used for providing the
taxable service by the service
provider.
33
Provided that this notification shall not apply in cases where, -
(i) the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of
service tax on input services, used for providing such taxable service, has been
taken under the provisions of the CENVAT Credit Rules, 2004; or
(ii) the service provide r has availed the benefit under the notification of the
Government of India in the Ministry of Finance (Department of Revenue), No.
12/2003-Service Tax, dated the 20th June, 2003[G.S.R. 503 (E), dated the 20th
June, 2003].
Explanation.- For the purposes of this notification, the expression “food” means a substantial and
satisfying meal and the expression “catering service” shall be construed accordingly.
[F. No. 334/3/2006-TRU]
(G. G. Pai)
Under Secretary to the Government of India
12 November 2010
You cannot charge ur client with abatement while doing finishing and completion service
12 November 2010
Sir,
As u said I cannot charge my client with abatement. But my question is how to charge my client the way in which he wants ie.,To charge only with the abatement.
As u said I cannot charge my client with abatement. But my question is how to charge my client the way in which he wants ie.,To charge only with the abatement.
13 November 2010
Your entry is under works contract as I understand:
You maybe paying VAT under compostion or regular route.
If under composition route you can claim the decudtin for materials based on actuals under Not.12/2003. This may not be easy and also valuation disputes possible.
If under regular scheme then pay ST on the balacne after payment of VAT. For example if you are paying VAT on 75% then pay ST on 25%.
Your clients software has nothing to do with your compliance as the responsibility for tax is on you not on the cusotmer.
You maybe paying VAT under compostion or regular route.
If under composition route you can claim the decudtin for materials based on actuals under Not.12/2003. This may not be easy and also valuation disputes possible.
If under regular scheme then pay ST on the balacne after payment of VAT. For example if you are paying VAT on 75% then pay ST on 25%.
Your clients software has nothing to do with your compliance as the responsibility for tax is on you not on the cusotmer.
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