Liability of service tax in Turn-key job

[Guest]

Whether service tax is payable on the entire contract value of Interior Designer with Turn-key job having borne Composition Tax @8% under MVAT or only on 33% of such contract amount after deduction for materials @ 67% though actual material component in some items say POP work is lower than 67% (i.e.30% material) or Furniture Items having materail component higher than 75%. Kindly enlighten & oblige.with warm regards Rajan Kadrekar

[Surender Gupta]

There is no specific exemption which is available for a composit contract undertaken by an interior contractor. However, that person may avail the benefit of notification no. 12/2003 for the cost of material involved in this contract.

AI Summary

Service tax liability on turnkey interior contracts: material cost deductible under notification, not whole contract value. There is no specific exemption for composite turnkey interior contracts from service tax; contractors may exclude actual material costs from the taxable service value by relying on the applicable notification benefit, but no uniform percentage presumption automatically applies across all items.