Please tell me if my understanding of the Notification No. 24/2012 on Service Tax is correct.
(I) In case where the Contractor's bill is divisible i.e. Value of Materials and Labour can be ascertained separately then Service Tax is to be charged only on the Labour Portion @ 12.36% which is to be shared by the Service Provider and the Service Receiver @ 50% i.e. 6.18% each.
(II) In case of a Composite Bill i.e. where Value of Materials and Labour cannot be ascertained separately, only then we use the concept of Abatement i.e.:
Original Works- 60% Abatement or in other words 40% of the gross amount charged in the bill is to be considered as the Service Portion and Service Tax is to be paid on that 40% @ 12.36% = 4.944% which is further to be shared by the Service Provider and Service Receiver @ 50% i.e. 2.472% each.
Repair or Maintenance Works- 30% Abatement or in other words 70% of the gross amount charged in the bill is to be considered as the Service Portion and Service Tax is to be paid on that 70% @ 12.36% = 8.652% which is further to be shared by the Service Provider and Service Receiver @ 50% i.e. 4.326% each.
Other Work Contracts not covered above- 40% Abatement or in other words 60% of the gross amount charged in the bill is to be considered as the Service Portion and Service Tax is to be paid on that 60% @ 12.36% = 7.416% which is further to be shared by the Service Provider and Service Receiver @ 50% i.e. 3.708% each.
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