TaxTMI 
TaxTMI 
Dear Experts,
If we pay Service Tax on output service of Erection & Commissioning, connected service done by a sub contractor, is there any exemption for him, since we are paying tax on final output service.
If Service Tax Paid on Output Service, connected input service exempted
17 Oct 2015 
2 Replies 
2269 Views Asked by
Sub-contractor liability: subcontracted services remain taxable while the main contractor may claim input tax credit.
A sub-contractor remains separately liable to service tax for services provided; such services are taxable even when used as inputs by a main contractor. The main contractor may, however, take and utilize input tax credit of service tax paid by the sub-contractor. Sub-contractor exemption applies only where the main contractor's output service is itself exempt; if the main contractor is taxable, the sub-contractor must also pay service tax. (AI Summary)
A sub-contractor remains separately liable to service tax for services provided; such services are taxable even when used as inputs by a main contractor. The main contractor may, however, take and utilize input tax credit of service tax paid by the sub-contractor. Sub-contractor exemption applies only where the main contractor's output service is itself exempt; if the main contractor is taxable, the sub-contractor must also pay service tax. (AI Summary)