Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - 032/2007 - Service Tax

Composition scheme for works contract service permits alternative tax discharge with conditions on CENVAT and irrevocable election.

A composition scheme allows the person liable for service tax on a works contract to discharge liability by paying an amount equivalent to two per cent of the gross amount charged, with the gross amount excluding VAT or sales tax on transfer of property in goods; providers who opt in cannot take CENVAT credit on inputs for the works contract, and the irrevocable option must be exercised prior to payment and applies to the entire works contract until its completion.