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Service tax

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Amitabha Mukherjee

Sr. Manager GST

253 Points Joined January 2010

Is Services Taxes rates increase for Re-Rubberising of Rollers as follows:-

Existings:-Taxes: Service tax @ 12.36 %( 30% on cost).

Sales Taxes: Vat @ 5 %.( 70% on cost)

Revised Rates: Taxes: Service tax @ 12.36 %. (On 100 % Cost)

Sales Tax: Vat @ 14.5 % (on 100 % Cost)

Kindly confirm

Replies (1)

Madhukar N Hiregange

Chartered Accountant

39039 Points Joined September 2008

Re rubberisation of rollers is a works contract under VAT. Therefore the material portion of the same would attract the local VAT which can be on actual basis or as per ad hoc deduction of service+ labour value as set out in the rules. In Karnataka it is payable on 75% if ad hoc deduction taken.

If actuals are taken then under rule 2A the ST is payable on the actual after deduction taken for material. If not actual then for repair jobs etc it is 70% of the value.

Therefore preferable that the same is on actual basis to avoid excess payment of either taxes.