Service Tax is leviable on the value equivalent to the gross amount charged for the works contract less value of the transfer of property in goods involved in the execution of the works contract which is leviable to VAT/ sales tax [Rule 2A of the Service Tax (Determination of Value) Rules, 2006].
How is service tax and VAT calculated on works contract?
Service tax is payable at composite rate on:
- 40% of the value of the original work (original work will include all types of new construction, alteration or additions made to damaged structures)
- 70% of the value in case of maintenance work.
- 70% in case of all other works contract.
Is Labour charges taxable under service tax?
According to rule 2 (g) of Service Tax Rules, 1994 “Supply of manpower” means supply of manpower temporarily or otherwise, to another person to work under his superintendence or control. If the service availed by you fits into above definition then you have to pay 100% of service tax payable with effect from 1.4.
What is WCT service tax?
Service tax on works contract: WCT concept was introduced wef 01/06/07 This category seeks to tax those services wherein transfer of property in goods is involved during the execution of works contract. The tax is on the services involved in the execution of a works contract.
What do you know about the service tax?
Definition: Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. This tax is payable only when the value of services provided in a financial year is more than Rs 10 lakh. This tax is not applicable in the state of Jammu & Kashmir.
Why do we give abatement in service tax?
In reverse law, abatement is a deduction from or refunding of duties on taxes on goods etc. In case of debts, abatement would mean reduction of payment where a fund is insufficient to meet all the claims.
What is work contract service?
Works contract means a service contract involving supply of goods to execute the contract. Hence, works contracts are a mixture of service and transfer of goods. Examples of works contracts are the construction of a new building, erection, installation of plant and machinery.
What is the rate of service tax 2016 17?
15%
Krishi Kalyan Cess, which was announced during the 2016–17 Budget, has become applicable from 1 June. A tax of 0.5% would be levied over and above the Service Tax and Swachh Bharat Cess. Till 31 May 2016, the Service Tax rate was 14.5%. With Krishi Kalyan cess, the service tax would increase to 15%.
How can I check my Service Tax notice?
Click on ‘Service Tax’ from the homepage and sign in to your account. If you have filed for any refund and the reimbursement is approved by the department, you will be able to see the ‘Check Status’ option and track your refund using your acknowledgement number from the refund request created by you earlier.
Is it mandatory to pay Service Tax?
“The service charge is an earning for restaurants and hotels, which is taxed by the government,” the restaurateur said. According to the restaurateur, the service charges collected are often kept aside as a corpus fund, which is used for the existence and sustenance of the company.
How is my service taxed?
When revenue is Rs 10lakhs or less – If the total Revenue you earn from freelancing work is Rs 10lakhs or less, Service Tax rules do not apply. You will be exempt from collecting and paying service tax on your services. Here Revenue means your total receipts from your clients.
Can input tax credit be availed on works contract service?
ITC shall not be available for any work contract services. ITC for the construction of an immovable property cannot be availed, except where the input service is used for further work contract services. They cannot claim any ITC on the works contract.
What is the scope of service tax works contract?
By this definition, the scope of “Works Contract” has been vastly increased by inclusion of “Movable Property” in the definition. Earlier, service tax works contract is restricted to construction related activities, but now all kinds of works contract activity is liable to be taxed under Service Tax.
Is “works contract” in negative list of services?
So in my view, practically “Works Contract” is not in Negative List of Services. Service tax Notification No. 25/2012 dated 20.06.2012 covers all the exemptions available under the Service tax provisions. Point number 12, 13, 14, 25 and 29 (h) covers the exemption related to Works Contract.
Is works contract taxable under section 66E?
Works contract is also included in the “Declared Service” under section 66E, which states as under “The following shall constitute declared services, namely ……… (h) Service portion in the execution of a works contract.” By this inclusion, the service portion in a works contract has become taxable under the Service Tax provisions.
What is the service tax rate for FY 2015-16?
SERVICE TAX RATE CHART FOR FY 2015-16 :w.e.f 15 Nov 2015 WITH NEW SERVICE TAX RATE 14.5% Service tax rate increased from 14.5% to 15% (increase by way of levying Krishi Kalyan Cess at 0.5% ). The Said change will be effective from 1st June, 2016. No cenvat credit for input, input services or capital goods.Invoice includes amount of accommodation.
