SERVICE TAX ON WORKS CONTRACT

[UMAMAHESHWAR HEGDE]

Kindly let me know how to valuate service in case of works contract

[PAWAN KUMAR]

Dear Sir,

Please read rule 2A of Service Tax Valuation Rules 2006 amended by Notification No.11/2014-ST dated 11.07.2014.

[Ganeshan Kalyani]

You may go though the link given in previous post. But to put before you a brief about the provision. The service portion in works contact service is 40% in case of original works contract. If it is repair and maintenance then the service portion is 70%.

AI Summary

Valuation of works contract service: service component allocation set for original works versus repair under valuation rules amendment. Valuation of services in works contracts is governed by the Service Tax Valuation Rules as amended by the cited notification, which prescribes fixed allocations of the service component depending on whether the contract is original construction or repair and maintenance; taxpayers should apply the amended valuation rule to allocate consideration between taxable service and non-service elements.