Work Contract

[Samik Chaudhuri]

Sir

We are manufacturing Co. Our contractor raises various Bill for Earth cutting, Tripper Hiring Charge, Civil Works. I would like to know whether we have to pay total service tax 12.36% on Bill value for Earth cutting or 40% of Bill value for Civil Works. Please suggest me.

With thanks and regards

Samik Chaudhuri.

[MAHENDRABHAI DESAI]

If you have entered with your contractor a single contract for civil works then all the services provided becomes works contract service and he has to charge you on 40% of his work.

He has to charge service tax on 40% of his bill + free material supplied by your co. + free consumables like water elect. supplied by you.

Again if you are pvt. ltd or ltd co and he is individual or partnership firm then he has to charge only 50% of service tax in his bill and balance 50% is to be paid by you under reverse charge.

AI Summary

Service Tax on Civil Works: 40% of Bill Value Taxed; Reverse Charge Applies for Private Companies and Individual Contractors. A manufacturing company inquired about the applicable service tax rates on bills for earth cutting and civil works. The response clarified that if the contractor has a single contract for civil works, the service tax should be charged on 40% of the bill value, including any free materials and consumables provided by the company. Additionally, if the company is a private or limited company and the contractor is an individual or partnership firm, the contractor charges 50% of the service tax, with the remaining 50% payable by the company under the reverse charge mechanism.