WORKS CONTRACT

[SUMEDH AYARE]

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.

AI Summary

Works contract service tax: taxable service portion allocated by contract type; reverse charge may allocate liability between supplier and recipient.
Service tax on a works contract applies only to the service component, computed by presumptive percentages of total contract value according to contract type (40% for original works; 60% for maintenance/repairs/reconditioning/restoration/servicing of goods; 20% for other finishing/completion services). The balance is treated as value of goods and is not service-taxable. Reverse charge applies where provider is an individual/firm/LLP and recipient is a body corporate, with tax apportioned 50% to recipient and 50% to provider; company-to-company supplies leave supplier liable on the presumptive service portion.