Ajay s (Accounts Officer) (243 Points)
09 February 2011Dear All
We are an EPC Contractor. We got a contract from our client and we are engaging 3 subcontractors
Whenever we are receiving the amount we are paying 4.12% under works contract.
Here My question is ,
1.Is our subcontractor liable to pay service Tax? if yes/No why ?
Ganesh
(CA)
(111 Points)
Replied 09 February 2011
Dear Ajith,
A sub-conntractor will be liable to Service Tax. He is also a service provider to the main contractor and the service provded by the Sub-Contractor is to be treated as Input Service by the main contractor.
Also, refer to this circular https://www.servicetax.gov.in/circular/st-circular07/st_circ_96-2k7.htm
Thanks,
Ganesh.
Ajay s
(Accounts Officer)
(243 Points)
Replied 09 February 2011
Dear Ganesh
The Sub contractor is asking for reimburse the service tax amount. We have already paid the service tax and we cant take credit too . how to solve this
Ganesh
(CA)
(111 Points)
Replied 10 February 2011
Dear Ajith,
You have opted for composition scheme, hence you are unable to take credit. If you had not opted for composition scheme, then you could have taken the credit and paid service tax at the standard rate of tax.
If you have made the first service tax payment in respect of this project at the composition rate, then you cannot change it for the said project/contract. Hope you would have assessed the benefits of opting for composition scheme.
In the given scenario, you have to pay the service tax demanded by the sub-contractor.
Thanks,
Ganesh
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