M/s X Ltd. has been awarded a contract (Works contract - taxable work) by M/s ABC Ltd. After X Ltd. executed 10% of the contract work, ABC Ltd. thought that the work, even completed by X Ltd. would not be of any help to ABC Ltd. and the contract was terminated by ABC Ltd. X Ltd. was paid compensation on termination of thecontract, as per the terms of the Agreement. Is X Ltd. liable to pay service tax on the compensation received from ABC Ltd.? Kindly clarify. Will the answer differ if the work executed X Ltd. falls under the exempted category of services, under the works contract service?
Menu
Service tax liability on compensation received
Replies (1)
As long as X ltd. has provided construction service to ABC , the amount received in whatever name it is called, may be treated as consideration for the service. If it is commercial construction and if ABC had abandoned the project itself, you have case to argue that the service is not taxable. But mostly, it is taxble. If the service is exempted, no tax is payable only because of the receipt in the name of compensation.
Recent Threads
- How to split freelance project income with a frien
- 194a for A y 2024-25
- Compensation & Benefits
- SAC code and GST rate transport services for anima
- Section 44AB is Gone — How Different is Tax
- Capital Gains from Cancelled Residential Project
- Import of goods data in IMS
- GSTr 9 24-25
- Change HSN
- TDS ISSUE ( DIFFERENT SECTION )
Related Threads
CAclubindia
