Service tax rate 6.1%

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2016 Dear Sir,

We are in the field of Works Contract.

We have received one Work Order from our client mentioning Service Tax to be charge @6.1% on basic cost of Labour Charges in the month of March.

I request if any one provide the notification of said rate.

Thanks in Advance

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
Follow

11 May 2016 To the best of my knowledge, Works Contract Services under Finance Act 1994 (as amended) is subject to tax at either 40% of the invoice amount or 70% thereof depending on the nature of the contract. Further by notification 26/2012, in case the contractor is an individual or partnership firm (not LLP) and the service recipient is a body corporate, then the service recipient is liable to pay 50% of the duty directly to the Government under Reverse Charge Mechanism. Therefore if the above condition is satisfied, then you are liable to charge only 2.90% or 5.08% of the total invoice amount. However if the contractor is a body corporate then the liability would be 5.80% or 10.16% depending on the nature of the contract. I am not aware of any provision that permits charging of 6.1% of the Works Contract Invoice.