Wct and st

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Shyam Kumar T K (Querist)
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23 November 2011 Iam working for a public sector PSU. In the proposals regarding execution of works if the material component and labour component is separately given how the Works contract and service tax is calculated. Can service tax be calculated on the gross amount including works contract tax?
For example
Material 6000
Labour 3000
total
Contractors Profit 1000
total 10000
WCT on 10000 400
total 10400
Service tax 1071
on 10400
Is the above calculation correct?

PUNEET GOYAL

PUNEET GOYAL (Expert)
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23 November 2011 The answer is based on the assumption that u falls under works contract service.

In above case value of taxable services shall be calculated as under:

VALUE OF TAXABLE SERVICES

Gross amount charged(including value of goods) – value of goods – sales tax/vat
(As per rule 2A of SERVICE TAX (DETERMINATION OF VALUE) RULES, 2006)

Thus service tax shall be calculated on rs. 3000/- plus profit attributable on rs. 3000/-.

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