CA Vikas Agrawal (Chartered Accountant ( Job)) (109 Points)
15 February 2008Query:-
If owner of property supplied all material to contractor for constrction of a house and giving only labour contract to contractor, then this contractor can charged Service tax @ 2% ( i.e., composition of scheame) or not?
CA. GOPAL SONIKA
(CHARTERED ACCOUNTANT)
(1426 Points)
Replied 15 February 2008
KOUSHIK
(Service)
(25 Points)
Replied 16 February 2008
We are engaged with manufacturing co. & fabrication. We are charging service tax on labour charges to our customer & one of our customer is told us don't charge service tax to us. Is it possible that we can't charge him a service tax?
What is the service tax rule about labour charges of fabrication work? Can we charge him service tax or not?
Why not we can charge him service tax?
Dear sir,
we are in business of providing labour, now here i earn as labour commission per day per labour on daily wages and also giving the salary to labour and also making the payment of provident fund under my firm's name only.
pls suggest whether total payment (i.e. salary+pf+commission) is the total turnover or only commission is turnover.
thanking you,
Hitesh
+9879798381
OFFICESELVA
(Service)
(515 Points)
Replied 27 July 2008
Whether salary and PF is received from your customers as reimbursable expenditure?
Madhukar N Hiregange
(Chartered Accountant)
(39034 Points)
Replied 10 October 2008
WRT - Rupesh Query
In this case since youhave mentioned piece rate it is assumed that the contractor will notbe paid unless he produces the pipe fittings and that he works on principal to princiapl basis with responsibility on him.
If so, the ST is liable if the activity of the contractor does not amount to manufacture as set out in Section 2 (f) of CEAct.
In this regard if there is a distinct and different item coming into existence then ti si considered as manufacture.
CA. Dashrath Maheshwari
(TaXpert)
(15103 Points)
Replied 04 July 2009
Section 2A of Service Tax (Determination of Value) Rules, 2006: Determination of value of services involved in the execution of a works contract:
(1) Subject to the provisions of section 67, the value of taxable service in relation to services involved in the execution of a works contract (hereinafter referred to as works contract service), referred to in sub-clause (zzzza) of clause (105) of section 65 of the Act, shall be determined by the service provider in the following manner:-
(i) Value of works contract service determined shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.
Explanation.- For the purposes of this rule,-
(a) gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract;
(b) value of works contract service shall include,-
(i) labour charges for execution of the works;
(ii) amount paid to a sub-contractor for labour and services;
(iii) charges for planning, designing and architect’s fees;
(iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;
(v) cost of consumables such as water, electricity, fuel, used in the execution of the works contract;
(vi) cost of establishment of the contractor relatable to supply of labour and services;
(vii) other similar expenses relatable to supply of labour and services; and
(viii) profit earned by the service provider relatable to supply of labour and services;
(ii) Where Value Added Tax or sales tax, as the case may be, has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then such value adopted for the purposes of payment of Value Added Tax or sales tax, as the case may be, shall be taken as the value of transfer of property in goods involved in the execution of the said works contract for determining the value of works contract service under clause (i).
I think everything is clear now.
CAclubindia
