cs murty (SAO) (28 Points)
25 September 2012
1. When the material and labor cannot be separated abetment is to be taken under works contract for payment of service tax. In such cases, is there any limit for materials in the total contract? If material involvement is less than 5%, can the abetment is allowable or not?
2. What is the difference between A & C for the abetments available under the works contract (70% and 60% respectively) in service tax. Work wise examples may be issued.
Madhukar N Hiregange
(Chartered Accountant)
(39034 Points)
Replied 26 September 2012
The abatement allows for payment tobe made on 40% of the value of original works, 60% in case of completion andfinishing services and 70% for repairs/ maintenacne/ AMC.
The actual content of the material in these WC cases would not be material.
Vikas
(CA)
(1135 Points)
Replied 27 September 2012
Dear Mr. Murthy,
The valuation rule in simple language is ;
40% - Original Works;
70% - WCT for movable properties;
60% - WCT for immovable properties...
You have not specified the nature of WCT, hence I cann't determine the transaction, whether it is a WCT or not.
Hence, please refer to the definition of WCT, vide Sec.65B(54) of the Finance Act, 2012.
If it is covered by definition, then you can opt for works contract valuation scheme as mentioned above.
Further, if it is not falling under the definition of WCT, then the service tax shall be levied considering the same to be covered by naturally Bundled Service, @ 100% tax.
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
CAclubindia
