Work contract

This query is : Resolved

RAMESH SHARMA JANGID (Querist)
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28 September 2013 Please tell me ,Which option would be better and is my calculation correct?
for my client

Nature of service : Bus body Fabrication on New chassis supplied by bus owner

Total amt charged Rs. 1,000,000 per bus

Raw material+Tolls and other cost by our client is Rs. 700,000
Vat Input on above (5%+13%) Rs.90,000 Aprox
Labor charge paid to contractor for this work Rs.100,000

Material supplied by bus owner him self of Rs.150,000(What would its treatment ?)

Profit Rs. 50000.00
Vat Payable @ 13% on 10,00,000 i.e.Rs.130000

MY SOLUTION:

OPTION 1
Rule 2A (i)of Service Tax (Determination of Value) Rules, 2006

Total amt charged Rs. 1,000,000
Less : value of property in goods transferred
Raw material used by our client+VAT Rs.790000
Labor charge paid to contractor -nil

Value of service portion Rs.210,000

S.Tax @ 12% on Rs. 210000 = Rs. 25200

OPTION 2
Rule 2A (ii)of Service Tax (Determination of Value) Rules, 2006

Total amount charged Rs.1,000,000

40 % of original work = rs.400000

S.Tax @ 12% on Rs. 400000 = rs. 48000

Please Suggest me

CA Suresh Jain

CA Suresh Jain (Expert)
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29 September 2013 Dear mr. Jangid ,your both the versions are not correct. In fact body building is a process of manufacture and therefor covered under the negative list. No service tax is payable.
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case

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RAMESH SHARMA JANGID

RAMESH SHARMA JANGID (Querist)
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30 September 2013 Thank you... Sir.

as per your advise please confirm me that

Does Bus body fabrication not covered by work contact service as per declared service of new service tax law?

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CA Suresh Jain

CA Suresh Jain (Expert)
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30 September 2013 Bus body building, in my opinion, is not a taxable service, it is part of Negative list.
****For clarification and Premier service pl contact group.blr@gmail.com

*Disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case.