Service tax

[subhash komalwar]

Dear sir,

Main contractor has claime Service tax on his bill to recover the service tax from client (who has alloted the work to the main contractor) However main contractor got the same work done by sub-contractor hence sub-contractor will submit the work done bill to main contractor.  So in this case will the sub contractor claim the service tax on his bill or therwise? Please clarify

Thanking you sir,

[CA Rachit Agarwal]

Main Contractor can avail the cenvat credit for the bills raised by the sub-contractor. Services of sub-contractor would be considered as the input service used for providing the output service. However the nature of input service for availment of cenvat credit is governed by Cenvat Credit Rules, 2004

Sub Contractor can also avail the cenvat credit. If the work is in the nature of works contract, the availment of Cenvat Credit depends upon the selection of the options.

[sukhvinder singh]

yes , the service of the sub contractor is under the service tax rule subject to cross the exemption limit upto 10lac or 9 lac as a case may be .

Main contractor can avail the cenvat credit on the bill raised by the sub-contractor

 

AI Summary

Service tax on subcontracted services: subcontractors should charge tax if taxable and contractors may claim cenvat credit.
Subcontractor services are taxable and must be charged if the subcontractor's taxable turnover exceeds the applicable exemption limit; the main contractor may nonetheless avail cenvat credit on subcontractor invoices as those services constitute input services under the Cenvat Credit Rules, 2004, and the subcontractor may also claim cenvat credit if eligible; for works contracts, availment of cenvat credit is governed by the option selected under the works contract provisions.