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

Reverse charge applies to work contract services, with recipient liable for part of service tax while contractor collects balance.
For new construction work contracts where materials and labour cannot be segregated, the taxable value is determined by applying the prescribed allocation to the contract price. In such cases, invoices that include subcontractor-provided details are acceptable. Under the reverse charge framework, the recipient of the taxable service must discharge its portion of the service tax liability while the service provider may collect the remaining portion on the invoice, after computing the taxable base using the prescribed allocation.