ST of Works Contract Service

[Elangovan V]

HI,

In Works contract Service, the contract has been awarded in the year 2008 for Rs. 600000/-

In 2008 advance of Rs. 100000/- recd, the Service tax liability of Rs. 12360/- i.e.,@ 12.36% is paid to the department, likewise one more advance recd during the year 2010 for which the service tax was paid @ 10.30%.  Now the entire work is completed we need to raise invoice for Rs. 600000/- i.e. 2012.  How service tax to be charged in the invoice and how much service tax to be paid after adjusting the ST paid on advances.  The illustration is given below;

                                Adv Recd             Rate of ST Paid                  ST Paid

                                100000                  12.36%                                 12360

                                100000                  12.36%                                  12360

                                100000                  10.30%                                  10300

                                100000                  10.30%                                  10300

               ______________________________________

 

                                400000                                                                  45320

                                ______________________________________

 

 

Pl explain.

 

AI Summary

Guidance on Service Tax Calculation for 2008 Works Contract: Bifurcation of Labor and Material Charges Explained An individual inquired about calculating service tax for a works contract awarded in 2008, with advances received and taxed at different rates. The query sought guidance on invoicing and adjusting service tax after project completion in 2012. A respondent advised bifurcating the contract price between material and labor, with service tax applicable only to labor charges and VAT on materials. If bifurcation isn't possible, a 4% tax rate applies without Cenvat credit. The advice emphasized that Cenvat credit is available only for input services, not input goods.