Works Contract Service

[SANDESH SHINDE]

Dear Sir,

Please explain us whether Service provider can charge Service tax 50% i.e 7% on full value and 50% under not any category i.e 40% or 70% of works contract service i.e 7% service tax liability of us as a Service receipent. Therefore please explain us whether he has rightly charged. Pls give us any references regarding this. Thanks & regards.

AI Summary

Clarification on Service Tax for Works Contracts: Original Works at 40%, Others at 70%, Shared Payment Responsibility. A query was raised regarding the correct application of service tax on works contract services, specifically whether a service provider can charge 50% of the service tax on the full value, and the remaining 50% is the responsibility of the service recipient. A response clarified that for original works contracts, the service portion is 40% of the contract value, and for other works, it is 70%. The service provider and recipient each pay 50% of the service tax on these portions. Another reply addressed the scenario of Annual Maintenance Contracts (AMC), suggesting that tax should be calculated on 70% of the gross value, with the recipient paying 50% under reverse charge.