Works Contract

[Samik Chaudhuri]

Sir

We are manufacturing co we wish to construct new building so we made an agreement with contractor who will construct the building with material which will be submitted by us. Contractor will raise the bill only for service potion. Now i want to know whether service tax 15% will attract on service portion bill or 15% on 40% i.e. the service portion including the supplied material? I need your suggestion very sincerely.

With thanks & regards

Samik Chaudhuri.

[KASTURI SETHI]

Sh.Chaudhuri Ji,

It is 15% of 40%. Notification No.24/12-ST) SBC and KKC to be shown separately in the bill. (ST 14% SBC 0.5% KKC 0.5%) RCM under Notification No.30/12-ST is applicable.Service Provider and Service Receiver both are to share liability of ST to be paid by 50% : 50%. (Serial No.9 of Notification No.30/12-ST refers.). You are a business entity.

[Ganeshan Kalyani]

ST is payablr @15% on 40% of Gross Amount (service value + value of material supplied by you to contractor ). 50% ST to be paid by you and balance by contractor. Thanks.

AI Summary

Service tax on works contracts applies to a portion of gross contract value; reverse charge requires equal liability sharing. Construction services where the contractor builds using materials supplied by the manufacturer are taxable as a works contract; service tax applies to a prescribed portion of the gross contract value (service value plus value of materials supplied). Separate billing disclosure of service tax and cesses is required, and the reverse charge notification mandates sharing the tax liability equally between service provider and service receiver.