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Service tax - works contract service

manoj (Service) (313 Points)

03 November 2014

What is The Works Contract. if any contract use consumble item then it is works contract. if yes then which value will considered for works contract

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4 Replies

Vinay Garg (Service Tax Expert) (780 Points)
Replied 03 November 2014

Works Contract is a single composite contract for Goods and Services. Goods portion liable to VAT and service portion liable to Service Tax . Consumables are treated as Service.

There are two methods to value Works Contract Service.

On the basis of Actual Value. like
- Labour charges + Amount paid to Subcontractor for Labour and other services + Cost of consumables.. etc.
On prefixed ratio basis
- i.e. In case of Original Works = 40% of total amount
- In case of Repair and maintenance = 70% of Total amount
- in other case = 60% of Total Amount.

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DEEPAK (STUDY ) (70 Points)
Replied 04 November 2014

Dear sir now it is 40% for original work and 70% for all other works from 11-7-2014

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 05 November 2014

(A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract;

(B) in case of works contract, not covered under sub-clause (A), including works contract entered into for,-

(i) maintenance or repair or reconditioning or restoration or servicing of any goods; or

(ii) maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property,

service tax shall be payable on seventy per cent. of the total amount charged for the works contract