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Service Tax abatement

(Guest)

THERE IS A CONTRACTOR WHO IS REGISTERED UNDER WCT CATEGORY OF SERVICE TAX. AND HE IS CLAIMING ABATEMENT OF 67%,

BUT THIS ABATEMENT IS GIVEN ONLY TO CONSTRUCTION CATEGORY NOT WCT CATEGORY.

THERE IS AN OVERLAPPING THAT IF HE IS REGISTERED IN CONSTRUCTION AS WELL AS WCT CATEGORY SO HE SHOULD CLAIM THIS ABATEMENT .....

SO MY QUERY IS CONTRACTOR CHARGE FULL SERVICE TAX OR CLAIM ABATMENT.

REPLY SOON AND THANKS IN ADVANCE

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EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 28 October 2009

Originally posted by :I'm The Best
"	THERE IS A CONTRACTOR WHO IS REGISTERED UNDER WCT CATEGORY OF SERVICE TAX. AND HE IS CLAIMING ABATEMENT OF 67%, BUT THIS ABATEMENT IS GIVEN ONLY TO CONSTRUCTION CATEGORY NOT WCT CATEGORY. THERE IS AN OVERLAPPING THAT IF HE IS REGISTERED IN CONSTRUCTION AS WELL AS WCT CATEGORY SO HE SHOULD CLAIM THIS ABATEMENT ..... SO MY QUERY IS CONTRACTOR CHARGE FULL SERVICE TAX OR CLAIM ABATMENT. REPLY SOON AND THANKS IN ADVANCE	"

EVERY SERVICE IS DIFFERENT AS MENTIONED IN ACT 65 OF SERVICE TAX.

IF YOU CAN PROOF SERVICE RENDERED IS OF CONSTRUCTION NATURE, NO PROBLEM

YOU MAY HAVE BOTH REGISTRATIONS, BUT YOU HAVE TO SATISFY THE SERVICE TAX AUTHORITY ABOUT THE NATURE OF YOUR SERVICE, KEEP IT IN YOUR MIND.

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(Guest)

For works contract service, composition scheme is available which is 4% of the gross contract value; whereas in construction contract abatement is avablae for 67% value of the contract. However, input credit can be taken for services and capital goods in respect of works contract service; whereas in construction service it is not available. Hence, it is better if you opt for works contract composition scheme.