WORKS CONTRACT

[SNEHAL SHAH]

Dear sir,

We are Manufacturing of Chemical Product . Our new Unit construction continue ( New construction ) at our another land . There is a two party providing construction services ( One main another sub contractor ) :

1) ABC CONSULTING ENGINEERS - HAVING A CONSULTING ENGG SERVICE TAX REG NO.( Main )

2) XYZ ENGINEERS & CONTRACTORS - HAVING A CONSTRUCTION SERVICE REG NO. ( Sub cont )

Both are Propritoer firm . ABC Issue Invoice with atteched invoice details [ Invoice issued by XYZ ENGG with Service tax charges Rs.100 ( construction cost ) X 12.36 percent = Rs.12.36 - Service tax ] .

Is it right way and right percentage of service tax as per above detials ?

Please guide us .

Thanks and regards,

SNEHAL SHAH

 

AI Summary

Private Limited Firm to Handle 50% Service Tax Under Reverse Charge for New Construction Projects A manufacturing company is constructing a new unit and has engaged two parties for construction services: a main contractor, ABC Consulting Engineers, and a subcontractor, XYZ Engineers & Contractors. The query concerns the correct application of service tax on invoices. A Wilson clarifies that the company, being a Private Limited firm, should handle 50% of the service tax liability under the reverse charge mechanism. In new construction cases where materials and labor values are not segregated, the taxable service value is 40% of the total value, making Example No. 2 the correct approach.