ABATEMENT ON WORK CONTRACT

[CS RAHUL AGARWAL]

Respected Sir,

Is there abatement in respect of WCT Services ?? I mean whether the abatement of 75% OR 70% (as the case may be) in Sl. No. 12 of NN. 26/2012 would be available to work contractor engage in construction of building /complex under composite contract ?

[CSSANJAY MALHOTRA]

Hi Rahul,

Please go through Notification No. 09/2013-ST dated 08.05.2013, same will clear your doubts.

 

“12.

Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entireconsideration is received after issuance ofcompletion certificate by the competent authority,-   (a) for a residential unit satisfying both the following conditions, namely:–   (i) the carpet area of the unit is less than2000 square feet; and (ii) the amount charged for the unit is less than rupees one crore;   (b) for other than the (a) above.

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(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;   (ii) The value of land is included in the amount charged from the service receiver.”.

[CS RAHUL AGARWAL]

Thank you Sanjay Sir. But still it is not cleared. May be there some mistake in the way i am asking. I just want to know whether the abatement as provided in Sl. No. 12 of NN 26/2012 (as ammended by NN. 09/2013) for construction of complex, building would be extended for Work Contract ?

[CS RAHUL AGARWAL]

I mean what would be difference if a person engage in execution of work for construction of complex in a composite contract AND a person engage in construction of building service involving goods & service ?? I belive still construction service is into picture after 2007 when WCT was introduced.

[Keshav Murthy]

Respected Sir,

The Works contract includes construction of building as the definition of Works contract is as follows "means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property"

If you are claiming abatement under NN 26/2012 the value should include land cost also, then the abatement of 75% or 70% can be claimed not when only construction activity carried out then the taxable value should be 40% as per valuation rules.

[CS RAHUL AGARWAL]

Thank you so much Keshav Murthy Ji. This confirmation only i needed to my understanding. Thanks a lot

AI Summary

Abatement for construction services clarified: works contracts qualify only when land value included and notification conditions met.
Abatement for construction of a complex or building applies only if the notification's operative conditions are met, notably that the value charged includes land and no CENVAT credit on inputs has been taken. Works contracts are within the definition where transfer of property in goods is leviable as sale, but if the notification conditions are not satisfied the valuation rules for works contracts govern the taxable value.