Please Help: Works Contract
Posted Date : 09-Oct-2013 , 08:37:41 pm | Posted By: ABHISHEK TEKRIWAL
Category :
Service Tax | Answers :
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Comments :
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A proprietorship concern is engaged in providing "Construction services other than residential complex, including commercial/industrial buildings or civil structures"
It is charging gross amount of Rs.47 Lakhs for a contract.In which they Used material of Rs.25lakhs(Rs.20 Lakhs Material +Rs.3 lakhs Excise duty +Rs.2 Lakhs Vat)and it is also taking services of a labour contractor who charged Rs.10,30,900(10,00,000+ Rs.30900 for service tax 12.36% x 25% as reverse charge is applicable and Balance 75% is also paying)now Questions are:
1.Whether TIN number is also required for material used?
2.In which manner we will issue bill ?whether we will charge both Service tax and Vat separatly?
3.is there any option of composition
(Abatment)scheme?
4.what amount of service tax would be payable in both case??Input Credit of Excise,Service Tax,Vat can be availed or not??
5.whether reverse charge will also applicable in this case of work contract as individual is providing services to company??
please help me...very urgent....tried alot to solve but could not...Thanks |
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| Comments |
| Posted By : |
17-Oct-2013, 11:05:12 |
| 1. TIN no. is will be required whether proprietor is raising two separate bills i.e. for material component & for Labor charges separately or they may be using Composite rate.
2. It depends upon the type of contract value & quantity of material used. As per the figures given in the question, it seems it would be better to consider the project as a work contract & pay service tax at composite rate of 4.944% since even if service tax is charged @ 12.36% considering Rs. 22 Lacs as pure labor value, assessee will not be able to take credit of Input material purchased. Assessee has to take care that option that opted cannot be changed in the remaining part of the year.
3. Yes, as enumerated above, composition scheme is there.
4. On composite rate Service Tax would be 47lacs * 4.944% - service tax paid on input services.
On normal rates 22Lacs * 12.36% - Service tax paid on input services.
5. Since the service provider is a proprietor reverse charge will be applicable if he is rendering services to corporates.
It is not understandable since the construction service provider is a proprietor, then why the labor contractor is charging service tax on partial reverse charge basis under manpower recruitment & supply service.
Partial reverse charge is not applicable when an individual is rendering a service to another individual.
Thanks,
CA Anshul Gupta
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