Rate of Service Tax under composite scheme

[PAWAN KUMAR SHARMA]

There is some confusion that what rate is applicable under Composite scheme e.g. In case of Painting Jobs vendor is charging the rates of service tax @ 3.433 % (which is 1/3rd of the effective rates of tax i.e. 10%) But another vendor is charging the tax on the same Job @ 4.12& Now want to know the service tax rates on the composit scheme in which material + labour both components are there.

AI Summary

Clarification: Painting Jobs Under Composite Scheme Should Be Taxed at 4.12%, Including Cess; Pre-2007 Contracts May Differ. A query was raised regarding the applicable service tax rate under the composite scheme for painting jobs, where one vendor charged 3.433% and another 4.12%. The response clarified that the correct rate is 4% plus applicable cess, totaling 4.12%. It was also noted that contracts established before June 1, 2007, may continue using previously applicable rates if tax has already been paid under an existing category, which might explain the differing rates charged by other contractors.