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Service tax - work contract or construction services
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....ervice tax - work contract or construction services<br> Query (Issue) Started By: - Bijay Shrestha Dated:- 20-10-2016 Last Reply Date:- 25-10-2016 Service Tax<br>Got 7 Replies<br>Service Tax<br>In case of many Real Estate Developers and Builders, while accouting for Service Tax and filing returns, they choose ST category of "Work Contract" or some choose "Construction Services"....
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.... . Why ??? Are both same ? in economic substances ?? are they free to choose any category or is there any legal methodolgy? Please advise. Reply By MARIAPPAN GOVINDARAJAN: The Reply: Please ascertain the services you are rendering. then refer the definition of 'Construction service' and 'works contract' and choose the correct one. Reply By Mahir S: The Reply: Sir, 1 ) When ....
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....the contractor buys the material and carries out construction and bills you for the whole, VAT / CST is payable on the material used which is transferred to you in the form of constructed structure. The amount paid to the contractor thus has a component of material and a component of service , is known as Works Contract. 2 ) When the contractor carries out the construction with material provided ....
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....by you and bills you for the work only, it is construction service. Hope the query is clear now. Reply By Bijay Shrestha: The Reply: Agree. Generally builder collects service tax from buyers in one hand and gets construction done by other sub-contractor and pays service tax on other hand. What happens when builder collects service tax from customers/buyers?? So it means if builder outsource....
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.... construction to sub contractors and that sub contractor uses his material and services then it falls under work contract right ?? And if builder also supply matrial to sub-contractor but sub contractor uses only that material and bills only for service then it falls under construction services right ??, Also if builder only uses own material and do construction on its own and collect service ta....
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....x from buyers of flats etc. Which category is used ??? Reply By Ganeshan Kalyani: The Reply: Works contract service . Reply By Gorantla Bhaskar Rao: The Reply: Explained clearly by Mr.Mahir ji. As such, if buyer supplies material and contractor constructs for buyer, then it is classified under construction service and if contractor uses his material and constructs for buyer, then it is works c....
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....ontract, as rightly explained. Reply By Ganeshan Kalyani: The Reply: Hope querist is satisfied withthe reply. Reply By Bijay Shrestha: The Reply: Agree with u all. Thanks a lot for your valuable inputs.<br> Discussion Forum - Knowledge Sharing ....