service tax on works contract

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CA Vikas Agrawal (Querist)
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21 March 2008 sir,
we r apvt.ltd.co, working as a builder, we gave the works cotract ( excluding cement & steel),
my querry is that when works contractor raised the running bill, then at what amount he will charge service tax,
bcoz in notification no. 29/2007, mention the value of work contract service determined shall be equivelent to the gross amount charged for the works contract LESS the value of TRANSFER OF PROPERTY IN GOODS INVOLVED IN EXECUTION OF WORKS CONTRACT, and LESS VAT TAX,

then in the case of works contract we will deduct all material used in execution of work contract is it right ?

annapurna

annapurna (Expert)
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28 March 2008 Your company is a private limited and known as builder. Your company has given the works contract to contractor and and your company will be supplying the cement and steel. When the works contractor raises the running bill, they have to charge the service tax either on the notification 12/2003, or 18/2005 or 1/2006 subject to certain conditions. While determining the value for calculation of service tax, even the cost of materials supplied should also form part of the gross amount charged based on the Valuation rules. Then accordingly the deduction towards material used in works contract can be allowed.
Please make the query more clear, i have tried to answer based on my understanding

CA Vikas Agrawal

CA Vikas Agrawal (Querist)
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03 April 2008 actually my query releted to composition scheame under which contractor will charged only 4% service tax+cess,( rate wef. f/y 2008-09)
so please have a look on notification no.29/2007, releted to composition of tax for works contract

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