We are service recipient.
As going through the bills of various parties, different parties are charging the service tax rate on different amount of total contract value (such 40% or 60% or 20% of total contract value) i.e 12.36% on 40% or 60% or 20% of the contract value.
Now the question arise that whether we have to pay the service tax on the balance amount of contract value (60% or 40% or 80%) on account of reverse service tax w.e.f 01-7-2012.
This is important and urgent as the value of contract is huge and the due date of service tax payment is 5-9-2012.
Clarification on Service Tax Rates for Works Contracts: Original Work 40%, Maintenance 60%, Other Works 20%, Reverse Charge Applicable. A service recipient inquired about the applicable service tax rates on works contracts, noting discrepancies in how different parties calculate the tax on portions of the contract value. The response clarified that service tax is payable only on the service portion of the contract. For original works, tax is due on 40% of the total amount; for maintenance and repairs, on 60%; and for other works, on 20%. Reverse charge applies where 50% of the tax is paid by the service recipient and 50% by the provider, specifically when the provider is an individual, firm, or LLP, and the recipient is a corporate body. (AI Summary)
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