Sir
Our manufacturing co engaged contractor to construct the new building and inner road development etc. It is to be mentioned here that 90% material will be supplied by our company and rest 10% (Bricks & sand) will be supplied by the contractor. Now i would like to know whether service tax will be calculated on only service portion or the including the total material with service portion. Pleas advise me.
With thanks & regards
Samik Chaudhuri.
Debate on Service Tax Calculation for Contractor Services: Should It Cover Only Services or Include Supplied Materials? A manufacturing company engaged a contractor for building and road development, supplying 90% of materials themselves. The query concerns whether service tax should be calculated on the service portion alone or include materials. One response suggests paying service tax on 40% of the total contract cost, citing specific tax rates and reverse charge mechanisms. Another highlights ongoing litigation and advises consulting Section 67 of the Finance Act 1994. The inclusion of free-supplied materials in tax calculations is noted as pending in the Supreme Court, referencing a related case. Participants share insights and legal references for further clarity. (AI Summary)
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