CA. HIREN THAKKAR (Practice ) (23 Points)
26 January 2017Client is into the business of Interior Designing work, Can we charge service tax on 70pc of total consideration by classifying same as works contract where materials and services both are involved ??? And in this case wether CENVAT credit is available ??? And also guide whether we have to take registration under Gujarat VAT act as well ????
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(170108 Points)
Replied 27 January 2017
In this type of works contract, the classification wouldbe under commercial construction services. The options under ST are: 1. Pay 4.12% on gross value under composition. Credit of CED on capital goods + Service tax credit on eligible input services wouldbe available. 2. Pay ST on 33% and VAT as per local VAT law. No credit available. 3. Pay VAT on actual materials transferred and pat ST on balance: if VAT paid on 65% then pay ST on 35% under Not. 12/2003. Credit on Capital Goods / Services available................Expert Madhukar N Hiregange CHARTERED ACCOUNTANT
Read more at: /forum/taxes-on-interior-design-work-188133.asp
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(170108 Points)
Replied 27 January 2017
"And also guide whether we have to take registration under Gujarat VAT act as well ????......"
Why not, when services provided in Gujarat. Would sugget to wait for GST, if possible.
P.S. the rates given in above reply are as of 4 years old, so rectify as of current applicable rate.
Nagendra Hegde
(Chartered Accountant)
(1948 Points)
Replied 27 January 2017
Dear Sir,
The answered which you had referred was given 4 years back. Law keeps changing :).
If its a original works contract (most likely) service tax shall be payable on 40% of the value, effectively 6%. In case of mere repairs and maintenance, ST would be on 70% of the value which would be 10.5% incl KKC and SBC.
Credit on Inputs not allowed (Ref 2A of ST (determination of Value) Rules.
If you can seggregated labour and material portion, you could go for actuals. i.e ST on labour and VAT on material portion.
VAT Registration in the state of operaton is required
Analysis of 20 GST Notices (including 2 Appeals) and Practise on Drafting(with recording)
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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