GOOD EVENING TO ALL EXPERT
WE HIRED A CONTRACTOR FOR WORK CONTRACT ALUMINIUM PARTITION MAKE. I WANT TO KNOW ONLY THAT ON WHICH AMOUNT I WILL PAID SERVICE TAX @ 70%
DETAIL ARE GIVEN BELOW.
MATERIAL VALUE = 75000 PROVIDED BY SERVICE PROVIDER / CONTRACTOR
VAT = 10125
TOTAL BILL = 85125
HE ALSO PROVIDE ANOTHER SEPERATE BILL OF LABOUR CHARGES .
PLZ TOLD ME THAT ON WHICH VALUE I WILL DEPOSIT 70% SERVICE TAX
Contractor's Separate Invoices Lead to Service Tax on Labor Only, Rule 2A Not Applicable, Reverse Charge Applies A contractor was hired for an aluminum partition work contract, and the query was about the applicable service tax on the contract. The contractor issued separate bills for materials and labor charges. Experts advised that since the contractor provided distinct invoices, Rule 2A of the Determination of Value Rules, 2006, does not apply. The service tax should only be paid on the labor charges. If the service provider is an individual or a partnership, and the recipient is a corporate entity, the partial reverse charge mechanism applies, splitting tax liability between both parties. (AI Summary)
TaxTMI 
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