20 May 2010
Works contract service was introduced on 1-6-2007.A composition scheme was introduced and the rate was 2.06% till 28-2-2008.It became 4.12% from 1-3-2008. Now, if Work executed after 1-3-2008 in respect of contract partly executed prior to 28-2-2008.Is it liable to tax at old rate of 2.06% or 4.12%.Why?
secondly, can composition benefit be claimed on advance received before 31-5-2007 for works contract to be executed after 1-6-2007?
21 May 2010
ST rates are applicable qua the year and therefore after 1.3.2008 it wouldbe liable at 4.12%. There is an argument that contracts started earlier wouldbe liable at 2.06% however it would require judicial confirmation to act on. As ST is payable on service provided and to be provided advances received prior to 1.6.2007 are not liable as there was no valid levy at that point of time.
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