TaxTMI 
TaxTMI 
works contract - service tax on sub contractor
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....orks contract - service tax on sub contractor<br> Query (Issue) Started By: - SANJAY MACHE Dated:- 15-4-2010 Last Reply Date:- 16-4-2010 Service Tax<br>Got 3 Replies<br>Service Tax<br>One of my client (B) is working as sub-contractor (B) for providing services to main contractor (A) towards the service contract(C) of main contractor (A) with his client (C). Main contractor has paid the service ta....
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....x on total value of services (C). As per agreements/work awards by main contrator (A) with my client (B)the service tax is to be borne by main contractor (A). Total turnover of my client (B) by subcontracts from main contrator (A) has exceeded Rs. 12 Lakhs. My Client (B) holds service tax registration and is paying service tax on direct orders (excluding sub-contract works).In this case whether my....
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.... client (B) is liable to pay service on sub-contracts? Whether he shall show the sales towards services-by-sub-contract in service tax returns with tax liability as nil? please advice and provide references in service tax notifications/circulars/acts. Reply By napolean bonaparte: The Reply: In terms of reference code 999.03/23.08.07 of Circular No.96/7/2007-ST issued in F.No.354/28/2007-TRU dated....
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.... the 23rd August, 2007 of Government of India, Ministry of Finance, Department of Revenue, Tax Research Unit, irrespective of the terms of the work order, where the service is taxable, whether in the hands of the sub-contractor or the main contractor, the same is liable to payment of service tax. In your case, as a sub-contractor, you have to pay service tax on the value received; and you have to ....
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....show the value in your returns for arriving at the cumulative value; the main contractor may take input service credit and utilize the same for payment of service tax on his output service. This position is effective from the date of issue of the above clarificatory circular. Prior to 23/08/2007, the position as stated by you prevails, i.e., sub-contractor need not pay any service tax when the mai....
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....n-contractor paid the same; secondly, sub-contractor can show Nil value in his returns. Reply By napolean bonaparte: The Reply: Prior to 23/08/2007, where the services provided by both the sub-contractor and the main contractor fall under different categories, then both the above persons have to discharge service tax on their respective values; and the main contractor is eligible to take cenvat c....
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....redit on the service tax paid by the sub-contractor; in case the service provided by the sub-contractor is an input service for the main contractor. After 23/8/07, the position is as stated earlier. Reply By Surender Gupta: The Reply: I agree with the views of Mr. Napolean Bonaparte. You have to pay service tax on sub-contract activities.<br> Discussion Forum - Knowledge Sharing ....