Calculation in WCT

[madhavvan n]

under works contract tax in service tax how the service tax to be charged is this right Contract value Rs. 100 Less VAlue of property transferred Rs. 40 Less VAT Rs. 5 Net value for WCT ST Rs 55 Service tax @10 % on Rs. 55 ie Rs. 5.5 pls confirm

[Madhukar N Hiregange]

AS I understand the contract value is all inclusive Rs100. Deduction for materials Rs. 40 + 5 for VAT is admissible under Not.12/2003 as well as under the WC Valuation. If so 55 includes ST of 10.3 %. Therefore divide 55 by 110.30 and multiply by 10.3% for the result. Another option is to opt for composition and pay 4.12% In both the options the credit on capital goods used for provding the service and the input services credit wouldbe available.

[madhavvan n]

what about service tax credit on inputs is its available under both options

AI Summary

Service tax on works contracts: taxable base excludes transferred property and VAT; composition route and input credit options noted. Service tax on works contracts is computed by deducting the value of transferred property and VAT from the all inclusive contract price to obtain the works contract value; if that net is tax inclusive, back calculate the tax by treating the net as inclusive and extracting the tax component. Alternatively a composition option may be chosen. In both approaches credit on capital goods and input services is available.