Vat charged On Repair job by Automobiles repair workshops in delhi

[Pramod HP]

The automobile repair workshops charge Vat on 80% of Total labor charges charged by them. having a plea that the total repair job consist of 80% Material cost & 20% Labor cost, as well charge 13.1236% Service tax (Consolidated) on total labor charge on 100% labor charge. they both are imposed on the labor charge.

Whereas One Car manufacturer's Dealers charge Service tax on 70% labor charge,and Vat on 80% of labor charge.

For Explanation 

TOTAL LABOR CHARGE: 1000

VAT ON 80% @12.5%: 1000*80/100*.125=100

SERVICE TAX ON 70%OF TOTAL LABOR CHARGE= 1000*70/100*.1236=86.52

TOTAL LABOR CHARGE INCLUSIVE OF TAXES =1186.52

Can any one update with new rule that has come not to charge vat on Labor charge.

Please elaborate

Regards

Pramod HP

AI Summary

Clarification on VAT and Service Tax: 80% VAT on labor as material cost; 13.1236% service tax on full labor charge. An individual inquired about VAT and service tax charges on labor by automobile repair workshops in Delhi. Workshops charge VAT on 80% of labor, claiming it represents material costs, and impose a 13.1236% service tax on the full labor charge. Car dealers charge service tax on 70% of labor and VAT on 80%. The query sought clarification on a new rule regarding VAT on labor charges. A response clarified that the authorized service station applied the correct tax rates under the DVAT Act and Service Tax laws, noting that VAT applies to goods, not services provided during the Works Contract Tax (WCT).