DETERMINATION OF VALUE OF SERVICE PORTION IN THE EXECUTION OF A
WORKS CONTRACT.
Notification No.
24/2012-S.T., dated 6-6-2012 read with Rule 2A Subject to the provisions of section 67 and 66E(h) of the act
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DIVISIBLE WORKS CONTRACT
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INDIVISIBLE WORKS CONTRACT
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In case indivisible works contract
Value of service portion in the execution of a works contract
shall be determine in the following manner:-
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In case indivisible works contract
Value of service portion in the execution of a works contract
shall be determine in the following manner:-
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A) Gross amount charged (excluding
VAT and Sales Tax) paid or payable
B) LESS Value of property in goods transferred in the execution of the
said works contract
(Value of property = value taken on which VAT and Sales tax paid
or payable)
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(A) in case of original works, service tax
shall be payable on forty per cent. of the total
amount charged for the works contract;
(B) in case of works contract, not covered under sub-clause (A), including repair or maintenance,
reconditioning or restoration, or finishing servicing of any goods, installation
of electrical fittings of an immovable property etc. service tax
shall be payable on seventy percent.
of the total amount charged for the works contract;
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Value of works contract service shall include, -
(i) service, labour & other similar charges
(ii) charges for planning, designing and architect’s fees;
(iii) hire charges for machinery and tools
(iv) cost of consumables and cost of establishment
of the contractor relatable to supply of labour and services;
(v)profit
earned by the service provider relatable to supply of labour and services;
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For the purposes of this rule,-
(a) “original works”
means-
(i) all new constructions; and additions/
alterations to on land that are required to make them workable;
(ii) erection,
commissioning or installation of plant, machinery or equipment or structures,
whether pre-fabricated or otherwise;
(d) “total amount”
gross amount charged
for the works contract Add:- fair market value of all goods and services
supplied in relation to works contract, whether
Less: the amount
charged for such goods or services and VAT or sales tax paid or payable
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CENVAT As per CENVAT Credit Rules,
2004 , CENVAT on Capital Goods and
input services shall be available except duties or cess paid on any
inputs ( Goods or Material Consumed ) , used in or in relation to the said
works contract
WORK CONTRACT SERVICES EXEMPT FROM SERVICE TAX
Notification No.
25/2012-Service Tax dated 20th June, 2012
12. Services provided to the
Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out,
repair, maintenance, renovation, or alteration of
(a)
a civil structure meant
predominantly for use other than for
business or profession;
(b)
a
historical monument, archaeological site or remains of national importance
(c)
a structure meant predominantly for
use as
an educational, a clinical, or
cultural establishment;
(d)
canal, dam or other irrigation
works; pipeline, conduit water supply or water treatment or sewerage treatment
or disposal; or
(e)
a residential complex predominantly
meant for self-use or the use of their employees
13.
Services provided by way of construction, erection, commissioning, installation, completion, fitting out,
repair, maintenance, renovation, or alteration of
(a)
a road, bridge, tunnel, or terminal
for road transportation for use by general public;
(b)
a civil structure or any other original works pertaining to a National
scheme
(c)
a building owned meant predominantly
for religious use by general public;
(d)
a pollution control or effluent treatment
plant or a structure meant for burial or cremation of deceased;
14. Services by way of construction,
erection, commissioning, or installation of original works pertaining to,-
(a)
an airport, port or railways,
including monorail or metro;
(b)
a single residential unit
(c)
low- cost houses up to a carpet area
of 60 square metres per house in a housing project approved Government of
India;
(d)
post- harvest storage infrastructure
for agricultural produce including a cold storages for such purposes; or
(e)
mechanised food grain handling
system, machinery or equipment for units
processing agricultural produce
as food stuff excluding alcoholic beverages;
29. Services by the sub-contractor providing services by way of
works contract to another contractor providing works contract services which are exempt
Contributed BY CA RAHUL SINGHAL
