Tax on Work Contract.

[Sudhakar Sinha]

Dear Sir,

Consider a case, a work contract is awarded to contractor for construction office building in which cement and steal are free issue material by employer and other material are in the scope of contractor. Please suggest tax applicable for such Work Contract.

Regards

Sudhakar Sinha

AI Summary

Works contract valuation: free issue materials included; choose direct valuation or composition scheme with differing tax and credit effects.
Value of works contract service includes labour, service-related charges and the cost of materials supplied by the service receiver, so free issue cement and steel are includible under the Determination of Value rule. A provider may either value only the service component and pay service tax at the normal rate or opt for the composition scheme based on a prescribed percentage of total contract value; Cenvat credit for input services and capital goods is allowed, but credit for duty on inputs is not, and sales tax on transferred goods is payable separately.