Service Tax on White wash & Painting

[Vinay Sharma]

Dear Sir,

Contract is for White wash and Painting with material and labour.

The contractor is not registered under service tax act and do not charge service tax on bill.

Will it be regarded as works contract and are we liable to service tax under reverse charge. If yes, then service tax will be 6.16% of 40% of bill value or 6.16% of 70% of bill value.

Regards.

[YAGAY and SUN]

Dear Bhuwan,

Yes, your understanding on this matter is 100% perfect that you need to pay service tax under Partial Reverse Charge Mechanism and with the amended position in law, tax would be calculated on the 70% of the total bill value @ 6.18% (i.e. 50% of the 12.36%).

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Mahir S]

Yes, and u can also avail credit on it.

[srinivasan.K kuppuswamy]

Sir,

How service tax on white wash and painting is eligible. If the white wash and painting for building will it be eligible.

Regards

K.Srinivasan

[Mahir S]

The topic here is in relation to works contract.

works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance. renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property;

AI Summary

Service tax reverse charge on works contract: recipient liable to pay tax on a specified portion of the bill.
When white wash and painting with supply of materials and labour amount to a works contract, the recipient must pay service tax under the Partial Reverse Charge Mechanism, with tax computed on 70% of the total bill at the composite rate referenced in the replies; the recipient can avail input tax credit. "Works contract" is defined as a contract involving transfer of property in goods in execution of construction, repair, renovation, fitting out or similar activities.