works contract

[Samik Chaudhuri]

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.

AI Summary

Works contract service tax: inclusion of receiver supplied materials affects tax base and triggers reverse charge liability.
The central operative position is that taxable value in a works contract is often treated by applying a service component proportion to the total contract price (commonly 40%), with reverse charge application so part of the tax is payable by the service receiver; valuation should be examined under statutory valuation principles and applicable reverse charge notifications, while the inclusion of receiver supplied materials remains subject to higher adjudication.