Service tax on construction services

In this case, the liability to pay service tax is on the service provider. In the contract, the service is being provided by the contractor to the developer. Therefore, the contractor will have to pay the tax to the government. Off course, the contractor is entitled to recover the tax from the developer.

If the contractor fails to pay service tax, the government will take action against him. The government cannot recover tax from the developer - who happens to be the service receiver.

It is between the developer and the contractor to choose terms of the contract.

For example let's assume that the amount settled in the contract is Rs. 11224/-

Now, if it is specified as including service tax, the tax will be calculated as under:
         Taxable value: Rs. 10,000/-
         Service Tax    : Rs.    1224/-
In this case, the contractor recovers Rs. 11224 from the developer and pays Rs. 1224/- to the government.

If the contract specified that tax would be extra, then
        Taxable value: Rs. 11224/-
        Service Tax    : Rs.  1373/-
        Total               : Rs. 12597/-

Here the contractor recovers Rs. 12597/- from the developer and pays Rs. 1373 to the government.

Thanks,

Sanjay Dwivedi

In this case will the developer have to charge Service TAx from its customer on sale of flats

Dir Sir, I want know to that service tax lived in food grain item stroge in private or Govt. warehouse .Foods Grain item Like as Yellow Peas,Green Peas Dun peas,Wheat Pluses etc. these item import from other country.I have give rent for above item stroge in warehouse. service tax is lived on rent or not please advise Thanking You sharma