please give idea about works contract if possible with example.
8 Replies
praveen
(Chartered Accountant)
(6971 Points)
Replied 30 December 2011
Works contract is a kind of quasi sale and service.
There is some part of material involved and major labour charges.
Some examples shall be fabrication, job working for big cos like L&T , Triveni Engg. etc.
Mukul Aggarwal
(Prop.)
(23 Points)
Replied 31 December 2011
What is the rate of Service tax on work contracts. Is it 4 % on gross turnover or 10% on 33% of gross turn over if it is not possible to account for exact material and labour component.
(Guest)
Rate of service tax for WCS is either 4.12% on gross amount charged for service provided or 10.3% on value determined under rule 2A of service tax determination of value rules, 2006. The rate of 10.3% on 33% value is not under WCS but for construction of complex if value of land is not included in the gross amt chgd.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 02 January 2012
Please refer to point number A, B & F in the file attached below, for clarification of doubts on Works Contract Services.
Point No. F on 'Clarifications issued by the Board' may be helpful to all.
Attached File : 483027 897913 works contract.pdf downloaded: 255 times
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 02 January 2012
Duty under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 is charged @ 4% presently. (4.12% inclusive of cess)
As rightly pointed out by Harsha, 67% abatement is available on Commercial or industrial construction service(Section 65 (105) (zzq) of the Finance Act, 1994) & Erection, commissioning or installation services (Section 65 (105) (zzd) of the Finance Act, 1994).
Mukul Aggarwal
(Prop.)
(23 Points)
Replied 02 January 2012
Can you elaborate Erection, commissioning or installation services ? What services are covered under this head?
Mukul Aggarwal
(Prop.)
(23 Points)
Replied 02 January 2012
Can you elaborate Erection, commissioning or installation services ? What services are covered under this head?
(Guest)
Erection, Commisison or Installation services mainly covers the E/C/I of any machinery , plant or appliances. It is important to note that if the service involves the supply of material , it shall be calssifiable under WCS. If it is a contract involving pure labour, it shall be classifiable under 'EC/I' Please refer Section 65(39a) of Finance Act for type of services covered.
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