Service tax in sub contract

This query is : Resolved

Share Report Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

03 February 2010 Please tell about service tax in sub contract.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
Follow

03 February 2010 Let me know what service you are doing as sub contractor

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2010 AS A SUB CONTRACTOR WE ARE ENGAGED IN BUSINESS OF EXCAVATION AND CRUSHING OF STONE AND MINERALS

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

24 July 2025 Thanks for the details! Here’s the **service tax treatment for subcontractors in excavation and crushing of stone and minerals**:

---

### 1. Classification of Service

* Excavation and crushing of stone and minerals fall under the category of **"Construction and Engineering Services"** or **"Support Services"** depending on exact nature.
* However, since this is about mining-related activities, it often comes under **Mining and Mineral Services** or **Works Contract Services**, depending on the contract.

---

### 2. Applicability of Service Tax

* **If you are subcontracted for excavation and crushing**, this is considered a **taxable service** under service tax law (before GST regime).
* Subcontractors are liable to pay service tax on the value of services rendered.

---

### 3. Valuation & Payment

* The value of service is the amount charged to the main contractor.
* The subcontractor needs to pay service tax on the amount invoiced for excavation and crushing.

---

### 4. Reverse Charge Mechanism (RCM)

* In some cases, the main contractor might be liable to pay service tax on subcontractor services under **reverse charge mechanism** (e.g., works contract services where the contractor pays tax on behalf of subcontractor).
* This depends on notification and whether subcontracting falls under notified services.

---

### 5. Recommendations

* Check the exact nature of contract & services under applicable service tax notifications.
* Ensure registration under service tax.
* Pay service tax monthly or quarterly as applicable.
* Maintain proper invoices and records.

---

### Summary

| Point | Explanation |
| -------------- | ---------------------------------------------- |
| Service type | Excavation & crushing = taxable service |
| Liability | Subcontractor pays service tax (usually) |
| Reverse Charge | May apply if notified under rules |
| Registration | Required if taxable turnover exceeds threshold |

---

If you want, I can help you find exact applicable notifications or draft a tax calculation for your subcontracting services. Interested?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now