Service tax under Works contract

[Srivatsan Krishnamachari]

Dear Experts,

I need clarification on below issues related to Works contract & Service tax.

a) How to calculate WCT (VAT) payable in the works contract scenario, under composition scheme and non-composition scheme

b) Benefits in Composition and in non-composition schemes

c) What is the service tax amount i need to pay and how to calculate the same.

d) Do i need to submit any forms before execution of the works contract to Sales Tax dept.

e) Any other useful info related to the WCT & SERVICE TAX.

Thanking you in advance

Regards

Srinivas

AI Summary

Works contract service abatement reduces taxable service value; reverse charge liability is shared between receiver and provider.
For composite works contracts, valuation rules grant a 60% abatement for original works so the taxable service portion is treated as 40%; service tax is applied to that service portion and, where reverse charge applies, liability is apportioned 50:50 between service receiver and provider. Pure labour construction is excluded from abatement and RCM, leaving full service tax liability on the contractor. VAT/WCT procedural matters and composition scheme calculations fall under VAT rules and require contract-specific review.