TaxTMI 
TaxTMI 
How to prepare invoice in case of work contract if the value of work contract is not ascertainable?
civil work contract
26 Dec 2015 
6 Replies 
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Service tax valuation in work contracts: standard value allocation and reverse charge treatment; treatment of free-supplied materials remains uncertain.
Where total contract value is not separately ascertainable, a defined portion of the contract consideration is treated as the taxable value of service for original and non-original works; individuals or partnerships supplying to companies fall under the reverse charge mechanism with the same allocation principle but modified tax incidence. Inclusion of materials supplied free by the recipient is contested between the statutory definition of consideration and valuation rules, and remains uncertain pending higher court determination. (AI Summary)
Where total contract value is not separately ascertainable, a defined portion of the contract consideration is treated as the taxable value of service for original and non-original works; individuals or partnerships supplying to companies fall under the reverse charge mechanism with the same allocation principle but modified tax incidence. Inclusion of materials supplied free by the recipient is contested between the statutory definition of consideration and valuation rules, and remains uncertain pending higher court determination. (AI Summary)