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Service tax

Ashok Kelkar (B.Com) (143 Points)

04 April 2016

What is the abatement rate in labour contract/contractor

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Megha Choudhary (Management Trainee) (541 Points)
Replied 05 April 2016

follow rule 2a(ii) on presumptive basis to determine service tax payable

because in case of works contract the word abatement is not used..rather specific percentage of work is taxable

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Vikas (CA) (1135 Points)
Replied 05 April 2016

Firstly, Ashok, there is no abatement prescribed specifically for a works contract (except for construction services).

As explained above, there is Rule 2A of Valuation Rules, which prescribes for valuation mechanism, wherein you may pay either identify the labour portion and pay Service tax thereon or pay on 40% value (original works) or 70% (other works contract).

Please be specific in your query, as the specific details of the contract is missing to identify whether it would be original works or other works contract.