Construction Service

[SNEHAL SHAH]

Sir,

We are the manufacturing of pharma product and due to new expansion New building construction work continue .

We have contract with contractor for with labour and material .

Contractor issued bill to us With separate figure Labour charge and Material consume and Service tax pay on Labour charge only ( 12.36% ) and For Material party pay Vat .

Is it correct or not please suggest .

Thanks and Regards,

SNEHAL SHAH

AI Summary

Service tax on works contract: service portion equals contract value minus materials, so tax applies to labour charges.
Service portion of a works contract equals the gross contract amount less the value of goods transferred; where invoices separate labour and materials, service tax is chargeable on the labour/service component, and where the recipient is a company and the contractor an individual, tax liability may be shared fifty-fifty.