SERVICE TAX ON CONSTRUCTION SERVICE

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2011 DEAR FRIENDS

I WANT TO KNOW APPLICABILITY OF SLAB OF SERVICE TAX ON COMPOSITE CONTRACT (MATERIAL & LABOUR) OF CONSTRUCTION ACTIVITY AND ABATEMENT OR EXEMPTION AVAILABLE, IF ANY

REGARDS,

VINIT DHIMAN

Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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05 February 2011 Dear Vinit

Under Construction service generally termed as WCT ( Works Contract Service )there are two methods of service tax.

1- If you can make separate bill for material and separate bill for labour work then you can charge service tax at general rate 10.30% on labor part only and you can claim cenvat credit on all 3 type of Input ( Cenvat on Input Raw Material, Cenvat on Capital Goods and Cenvat on Input Services )

2- But if you can not make a separate bill then you have to follow composition scheme. in this case your rate of service tax will be 4.12% but it will not be calculated on labor part only, it will be calculated on total gross bill value including material cost & labor cost excluding sales/vat tax thereon. And the rule of cenvat credit will be different here. Unlike general rule you can claim cenvat credit on only 2 type of Input ( Cenvat on Capital Goods and Cenvat on Input Services and not on Cenvat on Input Raw Material )

I hope your query is solved.

Best Regards
For Asutosh & Pankaj
Chartered Accountants
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Pankaj K Jaiswal, FCA
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