Works Contract Tax

[PONNADA B K RAVIKUMAR]

we are entered an agreeement for Amc of our Computers (through Residentail Engineers), last month the service provide charged Service Tax @ 10.3% on total bill value, where as this month thet are charged 30:70, 30% of bill value there are charging service Tax and again on total value of the bill value they are charges WCT @ 2.8%, can you pls confirm , is there any change in WCT , and from which date,

[Rama Krishana]

The scheme of 30:70 in not correct. How they identify 70% as cost of material whereas they are paying WCT on the whole amount at the rate of 2.8%. Since your case is of AMC, you may avail the benefit under notification no. 12/2003 (but you have to ensure to prove the cost of material). In case you are sure that your services are falling under the category of works contract it is better to avail the benefit of composition scheme @4%

AI Summary

Dispute Over Service Tax and WCT on Computer AMC: Correct Scheme and Notification 12/2003 Discussed A query was raised regarding the application of Service Tax and Works Contract Tax (WCT) on an Annual Maintenance Contract (AMC) for computers. Initially, Service Tax was charged at 10.3% on the total bill, but later, a 30:70 scheme was applied, with Service Tax on 30% of the bill and WCT at 2.8% on the total value. A respondent advised that the 30:70 scheme is incorrect and suggested using notification no. 12/2003 to prove material costs. For services classified as works contracts, the composition scheme at 4% was recommended.