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Works Contract Service

Rajesh Poddar (Chartered Accountant) (321 Points)

10 September 2008

A client is raising is bill as follows:-

Sales Rs. 100

Add: WCT 8 % i.e 8

ADD :SerTAX 4 % i.e 4

Total sales invoice Rs. 112/-

Is the above billing system fine ?

please reply

CA Rajesh Poddar

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11 Replies

kamal (CWA) (125 Points)
Replied 11 September 2008

Originally posted by :Rajesh Poddar
"	A client is raising is bill as follows:- Sales Rs. 100 Add: WCT 8 % i.e 8 ADD :SerTAX 4 % i.e 4 Total sales invoice Rs. 112/- Is the above billing system fine ? please reply CA Rajesh Poddar	"

The pattern is incorrect becouse Excise & Service Tax charged before charging any other Tax, however

Work Contract Rs : 100

Services Tax @ 4 % 4

Sub Total 104

Add Vat 80% of 104 @ 12.50% 10.40

Grand Total 114.40

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Rajesh Poddar (Chartered Accountant) (321 Points)
Replied 11 September 2008

thanks for prompt reply

as per your view it is service tax which should be added before adding WCT under vat , but from where did you arrive at "80 %" i.e 80 % of 104, correctly speaking under composition scheme of VAT it should be 8 % of 104 i.e Rs. 8.32 and hence total value should be rs. 100 + 4 + 8.32 = 112.32/- ??

Mohan (Service) (26 Points)
Replied 12 September 2008

Supply, Installation & Commissioning of Electro Mechanical Equipment for swimming pool - Rs.3,60,000/-

Add : MVAT @ 8% on Rs.3,60,000/- = Rs.28,800/-

Add : Service Tax @ 12.36% on 33% of Rs.3,60,000/- = Rs.14,684/-

Total Billing = Rs.4,03,484/-

Is this correct. Please confirm.

Regards,

Shree (Telecom Service) (23 Points)
Replied 13 September 2008

I think the MVAT works contract rate has changed to 5%

(Guest)

We execute a aluminium fabrication and glass cladding work under work contract.

Our gross bill - Rs.100,

Material Component -67% and 33% labour.

Pls tell me the what amount we charged to our client as a service in our bill.

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(Guest)

Originally posted by :Guest
"	Supply, Installation & Commissioning of Electro Mechanical Equipment for swimming pool - Rs.3,60,000/- Add : MVAT @ 8% on Rs.3,60,000/- = Rs.28,800/- Add : Service Tax @ 12.36% on 33% of Rs.3,60,000/- = Rs.14,684/- Total Billing = Rs.4,03,484/- Is this correct. Please confirm. Regards,	"

CA V. Mohanakrishnan (Chartered Accountant) (401 Points)
Replied 26 September 2008

As provided under Explanation (a) of Rule 2A(1)(i) of Service Tax (Determination of Value) Rules, 2006, under the CS also, as per Rule 3(2), gross amount charged shall not include Value Added Tax (VAT) or sales tax. Base for computation of CS is gross amount charged in the bill. This amount may be including VAT as well. If so, the amount of VAT required to be paid thereon will have to be deducted. This will avoid payment of ST on VAT. In case, if the assessee has opted for CS under VAT then the amount of CS under VAT will have to be considered, otherwise actual amount of VAT liability computed will have to be deducted. In case, if the bill comprises value of work done and amount of VAT separately then the value of work executed as shown will be the basis for computation of CS.

(Guest)

I join today 2.10.2008.

Very Interesting

CA. C V SURYAM (Practising Chartered Accountant) (865 Points)
Replied 05 October 2008

I vouch for the opinion of Mr.Mohana Krishnan with one reservation on consideratin of VAT for SErvice Tax. If the gross amount charged under WCT Services is inclusive of VAT also, irrespective of the scheme opted under VAT, same should be taken out from the gross amount and service tax shall be calculated on the balance amount. This is clear as per the notification nos. 29 & 32 of ST.

CA. C V SURYAM (Practising Chartered Accountant) (865 Points)
Replied 05 October 2008

Still there are 2 options available under MVAT Act in composition scheme i.e., 8% & 5% with different ITC restrictions. Moreover, the only one State allowing ITC under composition scheme is Maharashtra and no other State VAT Act allows ITC benefit under composition scheme.

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Rani (Account) (41 Points)
Replied 05 October 2012

Sir,

Please tell me i am work contractor and i have created a invoice on april 2012 but did not file service tax return and challan weather i have to take service tax @ of 5% of 4.12%? any intrest if yes how much?