service tax on works contract

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2011 A business person(dealing in fabrication ) pays compounded vat @3% + cess , on works contract(KVAT) and has total t/o of more than rs.10 lakh this f.y. Is he supposed to be registered under service tax as per provisions of service tax on works contract and if so, will he get the general exemption benefit and liability only arise on the sales above Rs.10 lakhs . Also should he apply for service tax under composite scheme ?

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)
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23 February 2011 Work contract and related composition under service tax is available only for commercial/residential construction and erection installation. If your fabrication work is in relation to above works then you can opt for composition.If value of materials is inseparable then Rs.10 exemption is only for labor portion as per Noti.12/2003. Otherwise gross contract amount is reckoned for Rs.10 lakhs.

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2011 Let me make it more clear - The work carried out is more of mosquito proof doors & windows wherein CT under VAT is paid..since service tax is leviable only on specified types of works under works contract , wherein erection , commissioning or installation is involved for P & M, equipment, structures etc , will this include the said work?

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