Service tax on Works contract-reg

[N Balachandran]

 

Sir,

When we execute the Turnkey contract ( EPC contract ) and the price for each activities are given seperately like; Design Engg, Supply, Erection and Civil works.   Can we opt the  payment of service tax under composition scheme only for Civil Works and remit the service tax @ 10.3% on Design Engg and Erection.?. 

My understanding is that, once the tax payable under composition scheme,  we have to pay @ 4.12% on the  Total value of the contract includes Design, supply , erection including civil works.  Civil works alone not eligibile for Composition scheme.  Is it correct?.

Pl clarify. 

N.Balachandran

[daya singh]

 Yes, the composition  scheme would be available only to such works contracts where the gross value of works 

contract includes the value of all goods used in or in relation to the execution of works  contract whether received free of cost or for consideration under any other contract.

[NANDKUMAR SAGWEKAR]

Yes works contract service which includes EPC contract also. You can take cenvat credit of services availed for

providing the WC service even you are paying ST under composition scheme of 4.12%

 

Thanks

 

ANAND SHEMBEKAR

CELL 9421187122

 

[N Balachandran]

Thanks for ur clarification.

[Aliasgar Tambawala]

To the best of my knowledge, under composition scheme Service Tax is 3.43% and not 4.12%.

[PRASANTA KHATAI]

Dear Mr.Aliasgar Tambawala

 

Can you plz.elaborate as to how under composition scheme Service Tax is 3.43% and not 4.12%.

Mr. Balachandran,

The provision of composition tax on works contract is merely for the convenient to the assessee for avoiding confusions, credit procedures, formalities, etc.,  If assessee wish to opt for composition tax in case of construction work / civil work which includes Land cost and other all type of costs on total value of the contract.

The service tax is applicable on total value the contract @ 4.12% & certain bifurgation like Design, Supplies, Erection etc., is not exempted. If we bifurgate the above costs in total contract it will be construed as single contract.  Hence in my opinion civil works cannot be executed without material, plan, design, erection if required etc.,  single labour or single material contracts are not works contract.

Conclusion : - If material involved with design, engineering, erection, material with labour in civil work, whether bifugatted or not will be treated as work contract ----if it isexecuted by single contractor and if it is issued to more than one contractor WCT service tax applicable only certain services @ 10.3%.

[rajkumar shukla]

CERTAILY IT IS 4.12%.

AI Summary

Composition scheme applicability to works contracts: cannot be confined to separately priced civil works and applies to total contract value.
A works contract is treated as a single taxable service for composition purposes when its gross value includes the value of all goods used in or in relation to execution, so the composition levy cannot be applied only to a separately priced civil-works line item where design, supply or erection form part of the same integrated contract.