Service Tax on AMC contract of Computer/laptops

[Reshma kochar]

Hi All,

We are proposed by a Vendor from Banglore for  annual maintaince of our computer and laptops.

Vandor has send the quotation  with following taxes:

Base Value

Service tax @ 10.3% on 100% of base Value

VAT @ 12.5% on 80% of base value

UP Additional Tax @ 8% on VAT

Do let us know, Is this arrangment is valid or not?

[YAGAY andSUN]

This arrangement seems valid as VAT and Service Tax both are chargeable to such transaction i.e. AMC contracts.

[Reshma kochar]

That I agree, I am confused about this 100%for S.T. and  and 80% for VAT,  plus vat rate of 12.5% and this UP additional tax also??

[YAGAY andSUN]

Service tax in this matter will be charged on the 100% value of the contract.  Further, WCT @ 12.50% will be charged on the 80% value (100%-20%) of the contractor under abatement norms (if the contractor does not keep the proper records/books of account that how much labour or material consumed for providing of such AMC, then 20'% labour cost is deductible from the total value of the contract for calculating the wct [vat) on the goods involved in execution of works contract). 

Further, 8% may be the cess on WCT/VAT Tax.

[Reshma kochar]

Sir will you be able to suggest me the section reference or any notification in this regard or any section reference of Karnataka Vat Act

 

 

[YAGAY andSUN]

 

In respect of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract specified in column (2) of the Sixth Schedule, subject to sections 14 and 15 of the Central Sales Tax Act, 1956(Central Act 74 of 1956), at the rates specified in the corresponding entries in column (3) of the said Schedule.

Kindly refer Sixth Schedule of the Karnataka Value Added Tax in this regard.

[Reshma kochar]

Thanks a lot Sir,

Do this vendor form Bangalore can impose UP additional tax, or only a vendor from UP could ??and CST of 12.5% could be charge on a lesser value or say 20 % or 30%..

[YAGAY andSUN]

Kindly pour more clarification ot your last query.

 

[Guest]

Dear Reshma

you can also see  notification 12/2003-ST

[gangaram chandwani]

Service tax is chargeable only on 20% service portion. Vat & additional tax is chargeable on 80% materials portion. No portion of value can simultaneously be called sale of goods as well as service.

AI Summary

Service tax on AMC contracts may apply to contract value while VAT targets the material portion, requiring apportionment. Service tax on AMC contracts may be applied either to the full contract value as a taxable service or only to the service component, while VAT is charged on the material portion after an abatement where labour content is not separately recorded; an additional local cess may apply to the VAT component. The Sixth Schedule classification under state VAT rules and central notification 12/2003-ST are cited as relevant guidance, and apportionment must avoid treating the same value simultaneously as sale of goods and service.