Service abetment tax on labour supply

Rashmi (Accountant) (140 Points)

24 March 2013  

 

Hi Good Morning Friends,

A contractor supplying labour and material to builder for new plumbing works. April-12 to June-12

Bill issued for labour plus material with service tax and vat, (VAT 5% and 12.36% on basic amount)

Bill issued for only labour supply without service tax.

Bill issued for labour supply taking 60% abetment like, (1000-60%)=400*12.36%=49.44+1000=final bill. Rs. 1050

Bill issued only material supply charged 5% VAT no service tax charged.

As far my knowledge there is no abetment for labour supply and 60% abetment is available for labour plus material supply, please correct me if I’m wrong.

As I have advised the contractor to collect and pay 100% service tax on labour bill and 12.36% on labour plus material bill.

Please give your valuable suggestions on above statement.

 

Regards

Rashmi.