Civil work - How to charge Servic Tax & VAT

[Bhalchandra Ramdasi]

Respected Sir,

We have to invoice for Civil work which includes 62% of Material  and rest is Labour. How to charge both the taxes in single bill ?. State is Orissa.

1]Can we charge Service tax on 100% basic value and OVat on 62% material?

2]Or Service tax on 38% and OVat on 62%? Can we avail credit of Input service tax & Cenvat credits?

3]Or should we charge service tax on 40% & Ovat on 60%? Can we avail credit of Input service tax& Cenvat Credits?

Thanks,

 

AI Summary

Guidance on Charging Service Tax & VAT for Civil Work: Rule 2A Highlights Tax Calculation & Cenvat Credit Details A query was raised regarding the appropriate method to charge Service Tax and VAT for civil work in Orissa, where 62% of the work involves materials and the rest labor. Two responses were provided. The first response suggested that under OVAT, the tax on materials varies based on labor deductions, and service tax liability can be calculated using Rule 2(A) or as a percentage of the contract value. The second response advised following Rule 2A(i) of the Service Tax Rules, 2006, allowing Cenvat credit on input services and capital goods, but not on inputs. Separate invoices may be necessary.