Service Tax Query

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Rakesh Jain

insurance agent

62 Points Posted on 25 August 2008

One of my client provides maintainance/repairing of online leakage sealing. In which he uses his manufactured spare parts / materials purchased.
He bills differently for Spare Parts / Material & Labour charges/ Repairing.
1. On which amount service tax would be levied.
2. If on both the amounts, is there any abatement.
3. Can he claim input credit
4. under which head he should get registered

1. wat would be his maharashtra vat liability

sometimes it may happen that spares and labour charges are billed in one only

Replies (3)

Rishubh Mathur

Analyst -Taxation

161 Points Posted on 26 August 2008

Mr Jain

Service tax is leviable on service charges (including labour charges, repairing, maintenance charges, etc.). for repair & maintenance u/s 65 (64).

Yes, he is eligible to claim input credit under Cenvar credit rules 2004.

CA V. Mohanakrishnan

Chartered Accountant

381 Points Posted on 27 September 2008

Cleaning services

Management, Maintenance and Repairs

Works Contract services

Depending on the nature of the contract the invoicing may be done under the above classification. Further under works contract services where there exists a material as well as service components there is an option of composite taxation at 4% of the gross bill value instead of 12.36% of the service component. this option can be excercised for each contract depending upon the percentage of material and percentage of service in each of the contracts before the first remittance is made of service tax. This would help in tax planning while quoting for contracts as well

CA V. Mohanakrishnan

Chartered Accountant

381 Points Posted on 27 September 2008

not sure about VAT in Maharashtra. However based on experiences in certain other states, the works contract is chargeable to VAT. Otherwise also material supply is liable for VAT