Reverse Charge- On work Contract

[Sanjeev Sharma]

Under reverse charge mechanism, 50% service tax is to be paid be contractee.

As per Section 65B(54) 'works contract' means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property”

 

In view of above whether contractee  have to pay service tax under reverse charge mechanism on expenses like vehicle repair expenses , computer maintenance, plant & machinery repair  , supply of food, printing of office stationery ext. 

[CA Rachit Agarwal]

Contractee would be required to pay 50% of the service tax payable vide notification no15/2012 dated 17th March 2012.

AI Summary

Reverse charge on works contracts: contractee bears service tax liability under prescribed notification for specified contract-related services. Reverse charge applies to services under a works contract as defined in Section 65B(54), and the contractee is required to discharge the recipient's share of service tax under the cited notification for services covered by that notification, including queries on whether items like vehicle repairs, computer maintenance, plant and machinery repairs, food supply and printing fall within that obligation.