VAT CHARGE ON 80% OF BASIC VALUE ( AMC services )

[Asked by Guest]

Respected sir,

We are manufacturing of Crane at Gujarat ( Engineering Unit ) . Our IT department brought AMC ( Anual Maintaince service ) contract with one giant hardware company at Karnataka .

This IT company raise bill to us with Service tax ( In case of maintenance or repair or reconditioning or restoration or servicing of any goods , pay service tax on 70% if value )  plus VAT charges as example below :

Basic Amount of Invoice :                                           Rs.100=00

Service Tax ( 70% of Value ):                                       Rs.     8=65 ( 12.36% on 70% of Basic Amount )

Total :                                                                            Rs.108=65

VAT ( Gujarat Vat – 12.50 % )                                       Rs.  10=00 ( 12.50% on 80% of Basic Amount – i.e.

                                                                                       100=00  x 80%=80  ,  80=00 x 12.50% = 10.00

 

NOW QUESTION:

Is it any Gujarat Vat Rules that u can charge on AMC bill 80% of Basic Value? If yes Please provide details guideline.         

Thanks and Regards,

SNEHAL SHAH                  

[YAGAY and SUN]

Under the abatement scheme of WCT if the contract does not fall in the category as mention in the Works Contract then, percentage of deduction for labour charges would be 20%.  Meaning that WCT will be paid on 80% of the value of the contract.  

Please check the relevant Act and Rules in this regard under GVAT Act and Rules.

 

SERVICE TAX CHARGED ON 70 % OF TOTAL VALUE WHEN VAT CHARGED ON 80% OF TOTAL VALUE SO TAXES ARE  CHARGED ON 150 %  OF TOTAL VALUE. WHY  ? WHAT IS LOGIC BEHIND IT.

[gaurav gupta]

We are also facing this problem of double taxation. On reconditioning of movable items like repairs and re rubbrising of rubber rollers, both the VAT and service taxes come into play. As per vat rules you can claim 20% for labour charges and as per service tax rules you can claim only 30% for VAT leading to double taxation. kindly advise

[Dhaval Kakkad]

Please let me know can asessee claim VAT credit on VAT collected by dealer on 80 percent amount of bill ?

AI Summary

VAT applied to an abated taxable value can overlap with service-tax apportionment, creating potential double taxation and credit issues.
Whether VAT on annual maintenance contracts is applied after a VAT abatement that deducts a labour component-resulting in VAT being charged on a residual portion of the invoice-while service tax is separately levied after its own abatement, producing overlapping taxation; whether this VAT abatement is grounded in the VAT Act and Rules; and whether VAT charged on the VAT-assessed portion is available as input tax credit.