education and higher education cess on work contract composition schem

[RAM AVTAR]

as per rule 3(1) of work contract composition schem a total 4% is payble on gross determined value of services.  whether education and higher education cell in included in 4% or it is 4.12%

[YAGAY and SUN]

Cess (Edn. Cess + SHE Cess) will be calculated extra on the 4%.

[RAM AVTAR]

finance act 2004 and 2007 says education and higher education cess calculated on the tax which is levied and collected under section 66 of the Finance Act, 1994.

while cluase 3(1) of work contract scheme says "

to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to four per cent w.e.f 1.3.2008, earlier it was 2% of the gross amount charged for the works contract.

 

AI Summary

Education cess on composition tax: cess applied extra to composition payment under work contract scheme.
Clause 3(1) of the work contract composition scheme allows discharge of service tax liability by paying a composition amount equal to four percent of the gross amount charged instead of the tax under section 66. One respondent states that education cess and secondary and higher education cess are calculated extra on that composition payment. The inquirer cites Finance Act provisions that prescribe cesses are to be calculated on tax levied and collected under section 66, raising a textual issue concerning cess computation on composition payments.