• Nov
  • 05
  • 2012

Service Tax On Works Contract – Exemptions – After 01-07-2012

Amit Mundhra, FCA, ISA(ICAI)

Service tax provisions in respect to “Works Contracts” have undergone major changes after introduction of new service tax regime. Works contract in itself is a very lengthy subject and law relating to Works Contract in Service Tax is available in a very scattered way. I am trying to summarize all the legal provisions relating to Works Contract in this new service tax regime in a series of articles. This article is the first one in the series.

Following points are covered in this article.

  • Definition of Works Contract
  • Works Contract as Declared Services
  • Works contract in Negative List
  • Works contract in Mega Exemption Notification.

DEFINITION OF WORKS CONTRACT

Section 65B(54) defines “Works Contract” as

“Works contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property”

There are 2 parts of this definition

  1. A contract where transfer of property in goods involved is leviable to tax as sale of goods, AND
  1. Such contract is for carrying out certain specified activities in relation to Movable Or Immovable property.

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.

INCLUSION OF “WORKS CONTRACT” IN DECLARED SERVICES

Works contract is also included in the “Declared Service” under section 66E, which states as under

Section 66E : Declared Services

“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.

“WORKS CONTRACT” IN NEGATIVE LIST OF SERVICES

Though, “Works Contract” is not expressly found in Section 66D “Negative List of Services” but there is one indirect reference to “Works Contract”.

Following is the sub clause (a) of Section 66D.

(a)    Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere-

(i)……. (ii)……. (iii) ……….

(iv)       Support services, other than services covered under clauses (i) to (iii) above, provided to business entities.

Here services provided by Government or a Local Authority is included in negative list but there is exclusion related to Support Services.

What is a “Support Services”

Section 65B defines “Support Services” as follows.

“Support services” means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or Works Contract, renting of immovable property, security, testing and analysis.”

The whole text above means that if Government or a Local authority is providing Works Contract Service to any Business Entity, then it will be taxable.

Though, I could not think of any practical example of this case where Government or Local authority is doing any works contract for anyone. So in my view, practically “Works Contract” is not in Negative List of Services.

“WORKS CONTRACT” IN EXEMPTION NOTIFICATIONS

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. I am trying to summarize the exemptions related to “Works Contract” in a simple way.

POINT NO. 12 OF MEGA EXEMPTION NOTIFICATION

Services Provided TO-

 

Government – Local Authority or Governmental Authority

 

By Way of

 

Construction – Erection – Commissioning – Installation – Completion – Fitting out – Repairs – Maintenance – Renovation – Alteration

OF

 

(a)                A Civil Structure or other original works, meant for use other than for commerce, industry, or any other business or profession.

 

(b)               A historical monument / archaeological site, or remains of national importance, archaeological excavation or antiquity specified under the Archaeological Act, 1958.

 

(c)                A structure meant predominantly for use as Educational, clinical, art or cultural establishment.

 

(d)               Canal, dam or other irrigation works.

 

(e)                Pipeline, conduit or plant for (i) water supply (ii) water treatment or, (iii) sewerage treatment or disposal

 

(f)                A residential complex meant for self use or for use of their employees or other persons specified in explanation 1 of section 65B(44).

 

 Important Points in point no. 12 :

1.      Service Receiver based exemption:

For claiming exemption under this point, Service receiver must be Government, Local Authority or Governmental Authority. If the service receiver is not Government, Local Authority or Governmental Authority then this exemption is not available.

2.      Relevant Definitions under point No. 12

Following are the relevant Definitions under this point.

Term Definition
Government Government is neither defined in this notification nor in the Finance Act. As per section 3(23) of General Clauses Act,“Government” includes Central Government and State Government.

 

Local Authority As per Section 65B(31) of the Finance Act “Local Authority” means;(a)   A panchayat as referred to in clause (d) of article 243 of the constitution.(b)   A municipality as referred to in clause (e) of article 243P of the constitution.

(c)    A municipal committee and a district board, legal entitled to, or entrusted by the government with, the control or management of a municipal or local fund;

(d)   A cantonment board as defined in section 3 of the Cantonments Act, 2006

(e)    A regional council or a district council constituted under the Sixth Schedule to the constitution.

(f)     A development board constituted under article 371 of the constitution.

(g)   A regional council constituted under article 371a of the constitution

 

Governmental Authority As per Notification No. 25/2012 dated 20.06.2012 “Governmental Authority” means;A board, or an authority or any other body established with 90% or more participation by way or equity or control by government and set up by an act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution.
Original Works As per definition given in “Service Tax (Determination of Value) Rules 2006, “Original Works” means;        i.            All new constructions; or

      ii.            All types of additions and alterations to abandoned or damaged structures on land that are required to make them workable.

iii.            Erection, commissioning or installation of plant, machinery or equipment or structure, whether pre-fabricated or otherwise.

Residential Complex As per Section 65B(24) of the Finance Act, “Residential Complex” meansAny complex comprising of a building or buildings, having more than one single residential unit.
Other Persons specified in Explanation to Clause 44 to Section 65B of Finance Act Explanation to clause 44 of section 65B of the finance act.1.      Members of parliament, members of state legislative assembly, members of panchayats, members of municipalities and members of other local authorities
2.      Any person who holds any post in pursuance of the provisions of the constitution in that capacity
3. Any person as a chairperson or a member or a director in a body established by the central government or state governments or local authority and who is not deemed as an employee before commencement of this section.

 POINT NO. 13 OF MEGA EXEMPTION NOTIFICATION

Services Provided

 

By Way of

 

Construction – Erection – Commissioning – Installation – Completion – Fitting out – Repairs – Maintenance – Renovation – 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 scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaaas Yojna.

 

(c)                A building owned by an entity registered under section 12AA of the Income tax act, 1961 and meant predominantly for religious use by general public.

 

(d)               A pollution control or effluent treatment plant, except located as a part of a factory; or a structure meant for funeral, burial or cremation of deceased;

 

 Important Points in Point No. 13:

1.      Status of Service Receiver is not important

Under this point, the status of Service receiver is not important. Only the specified services are eligible for exemption.

2.      Relevant Definitions under Point 13

Following are the relevant Definitions under this point other than already discussed in point no. 12.

Term Definition
General Public As per Notification no. 25/2012 dated 20.06.2012 “General Public” means;The body of people at large sufficiently defined by some common quality of public or impersonal nature.

 

 POINT NO. 14 OF MEGA EXEMPTION NOTIFICATION

Services Provided

 

By Way of

 

Construction – Erection – Commissioning – Installation –

 

of

 

Original works

Pertaining To

 

(a)                Airport, port or railways, including monorail or metro,

 

(b)               Single residential unit otherwise as a part of a residential complex,

 

(c)                Low cost houses up to a Carpet Area of 60 square meters per house in a housing project approved by competent authority empowered under the “Scheme of Affordable Housing in Partnership” framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India,

 

(d)               Post harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

 

(e)                Mechanized food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages

 Important Points in Point no. 14:

1.      Status of Service Receiver is not important

Under this point, the status of Service receiver is not important. Only the specified services are eligible for exemption.

2.      Some activities omitted

In these point activities of Completion – Fitting out – Repairs – Maintenance – Renovation – Alteration has been omitted as compared to point no. 12 & 13. This omission is worth giving attention.

3.      Relevant Definitions under Point 14

Following are the relevant Definitions under this point other than already discussed in point no. 12.

Term Definition
Single Residential Unit As per Notification no. 12/2012 dated 17.03.2012 “Single Residential Unit” means;An independent residential unit with specific facilities for living, cooking and sanitary requirements.

 POINT NO. 25 OF MEGA EXEMPTION NOTIFICATION

Services Provided TO-

 

Government – Local Authority or Governmental Authority

 

 

By Way of

 

(a)                Carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and up gradation; or

(b)               Repair or maintenance of a vessel or an aircraft.

 Important Points in point no. 25 :

1.      Service Receiver based exemption:

For claiming exemption under this point, Service receiver must be Government, Local Authority or Governmental Authority. If the service receiver is not Government, Local Authority or Governmental Authority then this exemption is not available.

POINT NO. 29(h) OF MEGA EXEMPTION NOTIFICATION

Sub Contractor

 

Providing Services

 

 

By Way of

 

Works contract to another contractor providing works contract services which are exempt.

 

 

 Important Points in point no. 29(h) :

1.      Only sub contractor providing works contract service is exempt:

For claiming exemption under this point, Sub Contractor providing services by way of Works contract is exempt. If sub contractor is providing services other than works contract, then exemption is not available

Exemption from Service Tax is a very important subject. It is to dealt with utmost care and after understanding the true intention of the legislature to avoid any legal complications.

Amit Mundhra FCA

Author is a Fellow member of the ICAI and he can be reached at amit.mundhra@gmail.com


56 Responses to “Service Tax On Works Contract – Exemptions – After 01-07-2012”

  1. rajesh mahajan says:

    Dear Amit,
    weare consucted jimkhanna club for haryana urban development authrity(HUDA)is laible to pay service tax . huda is govt body and huda devlop sector for residence purpose and conscted all amanties for facilted to the public i.e school, hospital road, sewerage treetment plant water works club etc jimkhanna club constucted not commercial purpose .huda constucted club and hand over to management on fee of cost to run the same for public .please advise us

  2. Basant Bhatt says:

    Respected Sir,
     I’m a Goverment Electrical Contractor working for PWD RES. Uttrakhand Jal Sansthan. Goverment does not pay any Service tax to me for their services in this case I hav to pay Service tax or not. The Goverment Electrical fitting works are exempted in Service Tax department in work contact service. Please tel me as soon as possible with notification number.

    Regards,
    Basant Bhatt

  3. Nand Lal says:

    Respected Sir,
    I am working in Rajiv Gandhi National University of Law, Punjab at Patiala. Some buildings are under construction and work stands allotted to different agencies. Some petty works are being got done from the local market which includes supply and erection/fixing etc. I shall be obliged if you could let me know : Is service tax is to be deducted from the contractors and other parties who is constructing building and doing finishing works such as wall panelling, etc. ? If yes at what rate? Thanking you

  4. vijay soni says:

    Dear sir
    I am electrical contractor in APMC in mp &carry out the work of road lighting
    shed lighting and other related electric work like pole erracion cable laying fitting etc in mandi yard. Weather this work covered in mega exempion of service tax . APMC also registered in 12A.

  5. Navpreet Singh says:

    dear sir, I am govt contractor and empanelled to carry out electrical works on otsourcing on labour rate basis by state electricity board. Please tell me if service tax applicable .if applicable on which basis
    thanks.

  6. Mr. Suman says:

    Dear Sir,

    We are Works Contractors, awarded building up of a school project for which our clients are duly registered under Section 12 AA of the IT Act. Under the prevailing provisions of ST, shall we be exempted from payment of ST ???

    Looking forward for ur timely advice & guidance,

    Regards,

    Mr. Suman,
    sumanofs@yahoo.co.in

  7. Vinay Kumar Agarwal says:

    Dear Sir,

    My TDS Deduct By FICCI under the Section 194J Fees For Professional Or Technical Services.Please suggest the position of service tax liability.

    Regards,
    Vinay Kumar Agarwal
    09548841311

  8. Moolaram says:

    sir,we are working as sub contractor such fixing and erection of solar power plant steel structure provided by main contractor and other items including labor arranged by us.
    are we liable for services tax?
    wct is matter of sales tax or services tax?
    what is rates of wct in Rajasthan?

  9. avinash chopra says:

    Dear sir
    I am a Govt. electrical contractor.Let me know the status of service tax after 01.07.2012.

  10. Shamim C Ibrahim says:

    Sir,

    Regarding original work:-
    One builder has assigned a contract for flooring and aluminium fabrication of doors and windows. SIr can you please clarify whether these works comes under “original works” as defined in the notification 24/2012

  11. Jagadeesh says:

    dear sir,

    My client maintain hotel and he provide material and paying wages to labor for repairs of the hotel walls. Then the provisions of works contract applicable?

    Please replay to this mail id as soon as possible.

    Yours faithfully

  12. RAVI GOVANI says:

    Dear Sir,

    Mr. A was getting a tender for constricting of Taluka seva sadan under taking by Guj.Government. and He is given that tender to Mr. B and Mr. B was same project given to Mr. C so please let me clear that service tax examination or not. please reply me as soon as possible

    Regards,

    Ravi Govani

  13. P.C.SAIN says:

    DEAR SIR,
    MY CLIENT IS TAKEN DEVELOPMENT CHARGES FROM LAND PLOT ALLOTTING .IN THIS MATTER PLEASE TELL ME IN CASE THAT SERVICE TAX IS APPLICABLE

  14. sonu kumar says:

    Dear sir

    I m A Government Contractor .
    please tell me Street light work & poll shifting work in Exempted in service tax or not. which notification is in under

    Thanx

  15. sonu kumar says:

    Dear sir

    I m A Government Contractor .
    please tell me Street light work & poll shifting work in Exempted in service tax or not.

    Thanx

  16. sarv priya consul says:

    work contact services provided to a school registered under 12aa are taxable?

  17. pawan bajaj says:

    sir i have contract of sanitation / conservancy work…..plz tell service tax is excepted for sanitation/conservancy work

  18. Deendayal says:

    Dear Sir,
    Is steel fabrication work done on labour basis for educational institution is exempted from service tax Please clarify.

  19. samar says:

    Dear One,

    we are a private university set up as an act passed in state legislative assembly. If you could please clarify the that if service tax will be levied on construction work orders.

    Thanks!

  20. raghav says:

    This query is related whether any works contract like construction part which is a body of the governament of karnataka and for the agricultural university any service tax is levied if levied what is the ratio % wise for the works on gross amount of the bill payable to contractor and how the return is filed

    If any exemption for agriculture university for the atonomous body please expalain

  21. ABV NAGESWARARAO says:

    Sir,

    Please clarify the following:

    1) Cement & Steel purchased by the company for construction of a factory shed.
    2) For constructing the factory shed, a works contract given to xyz vendor
    3) On completion of the work, vendor rising a bill for service of work
    4) Please clarify the service tax angle to pay any service on material purchased (cement & Steel )

    Thanks & Regards

    Nageswara Rao ABV

  22. venkat ch says:

    sir,
    We are the sub contractors
    is there any exemptions of either contractor paid service tax , i know that upto 31-08-2007 any one can pay the service tax is it right or not ?

  23. A G PAL says:

    Dear Sir, We are planning to award the digging/drilling of borewell along with installation of equipment on that well Monitoring borewells for environment assessment please advice that which type of taxes will be applicable in that case like:

    1. Service Taxif there is any exemption from service tax
    2. TDS
    3. PF
    4. Labour cessfor Rain Water Harvesting projects etc.
    5. Others

    Please revert back with positive response.

  24. CA. HARISH SHARMA says:

    WILL SERVICE TAX APPLY ON WORK CONTRACT AWARDED BY RAJASTHAN HOUSING BORAD JAIPUR ?

  25. P.C.SAIN says:

    service tax is applicable on construction of houses of housing board please reply as early as possible

  26. Anupam Rastogi says:

    Dear Sir
    I am Contactor doing construction work of steel Bridge in Uttrakhand for
    Tehri hyodro devlopment corporation & Border Roads organisation.
    I want to know that these work are 100% Exempted or not.
    Please provide your views
    Thanking you

  27. Sibina says:

    Dear Sir,

    I would like to know that does service tax is payable for sub contract work of water authority (Jappan Water Project)?

  28. A.K.Shekar says:

    dear Sir
    A construction contractor who is building a dam for public utility for Tamilnadu Government has availed security services from us for protection of construction materials in the dam site and has provided a letter requesting us not to charge service tax.
    2) Another contractor who is constructing IT offices in government promoted SEZ is requesting security services for his construction site and wants exemtion from paying service tax.

    Please offer your valued counsel.

  29. Mohd Afaque says:

    sir,
    I am a contractor doing civil construction work like Repairing & Maintenance , construction and Painting in FOOD CORPORATION OF INDIA (RAJASTHAN) & (GUJRAT) This department is providing services i.e.handelling & transportation of food grains including preservation .
    I want to know that ,do I have to deposit the service tax for these works or it is exempted.If exempted,then under which clause.I also want to tell you that the are not paying me the same.

    Thanks.

  30. v.v.d.murali says:

    Dear sir,
    our company is a construction company constructed steel plant (ingot manufacturing unit)are we exempted from service tax under intermediatory service please clarify
    v.v.d.murali
    deccan_muraliyahoo.co.in

  31. Habeeb says:

    Sir,

    We are contractors for insulation work of boiler and pipelines. We are registered under “Erection, Commissioning & Installation” with Service Tax Deptt. and charging 12.36% Ser.Tax (present rate). Work involves application of insulation purely labour and only a very small portion of consumption of material say around 3% or even less. One of our client insisted to obtain NDC (No Deduction Certificate) from Orissa Sales Tax Deptt. and the Sales Tax authorities issued NDC by authorizing our client to deduct 5% VAT(TDS) at the existing rate on 5% of total bill value {say for Rs.1,00,000/- bill (incl. Ser. Tax) VAT(TDS) be deducted on Rs.5,000/- at existing rate say 4% means Rs.200/- being VAT(TDS)}. In NDC issued by VAT Deptt. of Orissa they have mentioned the following wordings “That the above mentioned works contract involve both transfer of property in goods and labour & services. Does this have any impact of our charging bill @12.36% as per Erection, Commissioning & Installation head of Service Tax.

    Now the client is telling that he will pay service tax on 40% of gross value that too 50% of Ser.Tax and balance will have to be paid by us.

    Kindly advise me whether Ser.Tax has any relation with VAT.

  32. rajat says:

    Dear All,

    I have a query regarding WCT applicability. The WCT rates are specified by the State Govt. to illustrate in an example: WCT rate in Delhi is 4% irrespective of the type of contract. What about the Threshold limits. Is that also with respect to States or is it based on nature of Work.

    Any help would be appreciated.

    With Regards,
    Rajat.

  33. arvind kumar tripathi says:

    sir,
    I am a contractor doing civil construction work in UTTAR PRADESH RAJYA BHANDARAN NIGAM(U.P.STATE WAREHOUSING CORPORATION).This department is providing services as CENTRAL WAREHOUSING CORPORATION i.e.handelling & transportation of food grains including preservation for government organisations like food corporation of india,rationing & food corporation etc.
    I want to know that ,do I have to deposit the service tax for these works or it is exempted.If exempted,then under which clause.I also want to tell you that the are not paying me the same.

    Thanks.

    A.K.Tripathi

  34. P.R.INDUSTRY says:

    Works Contractor service tax and vat percentage details

  35. ashok khandelwal says:

    Dear Sir,

    We have entered in a contract with a company to install solar power project at Rajasthan. The company will install the solar project including material,labour,technical assistance. Some material supply by suppliers directly to company and some through the company who will install theproject. advised about WCT .

    thanks

  36. diwakr says:

    kindly suggest about the works tax service tax on a contract value of 15 cr

  37. Prithipal Singh says:

    Dear Sir
    I am a government contactor working with a Uttar Pradesh Developement Authority. I have constructed 100 houses with Carpet Area of 36 square meters under the Kashiram Gareeb Avas Yojna. These houses were given to BPL citizens of Uttar Pradesh free of cost. I will like to ask whether my Firm will be relieved/exempted of service tax as mentioned in no. 14 of your Article.(construction before 2012)
    Please reply me on my email i.e sbikramsmailbox@gmail.com

    Thanking You
    Prithipal Singh

  38. Sharad Agarwalla says:

    We are coke oven contractors and providing services in the field of operation and maintenance of coke plant. We are giving this service to big industrial houses like Tata, Jindal Steel & Power ltd and many other companies.
    Now Tata is giving this as Support services and paying full Service Tax @ 12.36 %.
    JSPL is not giving any service Tax giving reference of notification 25/2012 stating this work as intermediary services and as steel is Excisable falling under mega exemption Point no 30(C)
    Jaibalaji and one more company is giving 25% of 12.36% stating manpower supply for job contract.
    Now in our case all the service receivers are steel manufacturers hence excisable and we are providing service of similar nature but Service Tax is different in all cases.
    What should be our stand and how we should file service Tax return. Can we have all different type of tax structure. Please advice

    Sharad Agarwalla

  39. bb rao says:

    Hi All,

    Please let me know, We are handling the accounts section of a construction company, we are working GOVENMENT PROJECT OF BRIDGE WORK, and we have gaven a sub contract to other person. are we applicable for service tax or not. And sub contractor submitting the service tax bill it is applicable or not

    Please let me know on which Ratio the service tax will be charged on BASIC VALUE and how much % of exemption will comes.

  40. Rahul Chopra says:

    Dear Sir,

    I am a civil contractor. I have a query there is a tender advertised by Haryana Tourism for Construction of Multipurpose hall on the land adjoining Gymkhana Club, HUDA at Jagadhari. The hall would be part of the Gymkhana club. Is the service tax applicable on such type of works?
    Rahul

  41. surinder singh says:

    Sir,
    Our Institute is providing Technical education and is an autonomous body fully funded by Govt. of India. Whether Security/ Sanitation Services and other Civil/Electrical Works carried out by us through outsourcing are exempted from Service Tax or not. Please intimate the same on e-mail ID – sajjan4s@yahoo.com

    Hoping for early reply.

  42. Nitin V says:

    Sir,
    Please let me know if the cleaning , housekeeping & security services for the housing societies is exempted from service tax? if, yes what is the supporting clause?
    As the housing societies do not come under business entity & they are non profit organization hence are the housing societies exempted from service tax?\

    Please respond to my email ID info@synergyservices.co.in
    I am looking for accounting /auditing consultant for our company.

    regards,
    Nitin Visputey
    SYNERGY SERVICES

  43. Yash D Shah says:

    Dear Sir, We are borewell Drilling company, we undertake turn-key projects for water borewell drilling, Rain Water Harvesting, Monitoring borewells for environment assessment etc. i.e. we deal into water resources development. please advice if there is any exemption from service tax for Rain Water Harvesting projects etc. Also, I request your clarification for the follwing clause -

    3
    [(97a) “site formation and clearance, excavation and earthmoving and demolition” includes, —

    (i) drilling, boring and core extraction services for construction, geophysical,
    geological or similar purposes; or

    (ii) soil stabilization; or

    (iii) horizontal drilling for the passage of cables or drain pipes; or

    (iv) land reclamation work; or

    (v) contaminated top soil stripping work; or

    (vi) demolition and wrecking of building, structure or road,

    but does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing,
    renovating or restoring of water sources or water bodies;]

    Please reply & oblige. Thank You!

  44. Subash Chandra Kar says:

    Dear Sir

    We are small builder in bhubaneswar building 11 duplex in bhubaneswar on sharing basis which comprise of 3 beed room,3 toilet, one kitchen,one darwing room and one dining room.we have sold 7 plot to our customer and have started construction with agreement for construction.The rest 4 duplex with land is to be given to the landlord.i want to know about the service tax applicability ?

  45. Bijay Kumar Das says:

    Respected Sir,

    We want to know that if in a Company, men power is supplied by a registered Contractor,whether he will liable for service tax on amount of bill raised upon Co. for supply of man power. We alos point out that Co. is paying commission to the contractor on total amount of bill raised

    Please provide us suggestions

    Thanks

  46. kapil says:

    Dear Sir
    My client is Interior decorator can he opt above work contractor scheme.Can he eligible for input cenvat credit on materials

  47. Bhaskar says:

    Hi All,

    We are handling the accounts section of a construction company, and the respective company’s undertaking is Works Contract. we need to charge a Service Tax on our bills.

    Please let me know on which Ratio the service tax will be charged on BASIC VALUE and how much % of exemption will comes.

  48. CA ASHUTOSH SHRIVASTAVA says:

    Dear Amitji
    thanks for nice and deatiled presentation.
    Please elaborate term Governemntal authority as defined in Not No 25/2012 for the purpose of clause 12(f). Whether the conditions given for the term are cumulative or not.
    My client is a state government u/t. Engaged in the activity other than assigned to municipality. Please clarify that the service tax is payable for the resident quarters constructed for its employyes engaging contractors. Previsouly same is exempt as per explanation of term residential complex. pl clarify position after 1.7.2012.
    Thanks in advance

    CA Ashutosh Shrivastava

    Thanks and regards

  49. ROHAN says:

    Hi

    I am doing washing of linen like bedsheets, towels etc used in the trains like rajdhani belonging to Indian Railways. I have a laundry where i carry out this washing work. My people also deliver this linen in the trains and remove the dirty linen from the trains ( loading and unloading )

    What is my service tax impications

    Please advice
    Regards,

    Rohan

  50. Abhay Aggarwal says:

    In reference to the point no. 25 of the mega exemption notification what will be the status of taxability of services provided by sub-contractor which are directly passed on to the service receiver who is government authority by the principle of accretion and the main contractor has nothing more to pass.

    Please clarify.

    Regards,

    Abhay Aggarwal,
    Advocate

    9810932285

  51. CA Amit Mundhra says:

    Dear Mr. Rajiv

    The exemption to sub contractor is only available if the works contract of the main contractor is exempt under exemption notification.

    This is a kind of umbrella provision. If main works contract is exempt, then its sub contract works contract is also exempt.

    It may be noted that only “Works contract Service” of the sub contractor is exempt under point 29(h). All other services to the main contractor will be taxable.

    CA Amit Mundhra

  52. CA Amit Mundhra says:

    Dear Vijay Joshi,

    Yes, your observation is correct. there is no scope for services rendered to Educational institutions under the Exemption List. Point no. 13(c) covers the institutions registered u/s 12A. but there is cumulative condition that such building should be used for religious purpose by general public. Educational purpose cannot be said to be religious purpose.

    CA Amit Mundhra

  53. srs says:

    This is with reference to the above captioned subject

    there are about 100 people those who have purchased the appartments have paid the service tax to the service tax Department through the developer in 2007-08 & 2008 – 09, based on the demand given by the developer. The developer also has deposited the service tax to the government. Later, there was a clarification through a Govt. circular that the service tax in connecting with the construction of residential complex is not applicable. Based on this service tax position prior to 1st july 2010 reg, there is a clarification which i could able to find out thru website issued by Commissioner of Central Excise, Pune-III, Trade Facility No. 1/2011, dated 15-2-2011 stating that

    With effect from 1-7-2010 (the Finance Act, 2010), an explanation has been inserted below sub-clause (zzzh) of section 65(105) to clarify that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly .
    And he clarifies that:
    (a) Where services of construction of Residential Complex were rendered prior to 1-7-2010 no Service Tax is leviable in terms of para 3 of Boards Circular number 108/02/2009-S.T., dated 29-1-2009. The Service of Construction of Residential Complex would attract service tax from 1-7-2010. Despite no service tax liability, if any amount has been collected by the builder as “Service Tax” for Services rendered prior to 1-7-2010, the same is required to be deposited by the builder to the Service tax department. Builder can not retain the amount collected as Service Tax.
    (b) For services rendered after 1-7-2010 for which payment has been or is made after 1-7-2010, service tax is leviable and builder is liable to deposit the service tax to the service tax department. The only exception to this is provided within the parenthesis () in the “Explanation” in para 3.
    (c) For services rendered after 1-7-2010 for which payment was made prior to 1-7-2010, service tax has been exempted by the Govt. based on documentary evidence vide notification no. 36/2010-S.T., dated 28-6-2010 as amended. Therefore, this benefit can be availed by builders on the basis of documentary evidence.

    Commissioner of Central Excise, Pune-III, Trade Facility No. 1/2011, dated 15-2-2011

    In this situation where the service tax refund case stands for.

    I have made severe follow-up pn 2-3 occassions since no one ready to give any help let me know what needs to be done, to get back this service tax refund.

    Please help

    Regards

  54. NSS says:

    Dear Mr.Amit
    WIth respect to Point NO: 29h, If you read the Point, it gives a meaning that exemption to subcontractor is available only if the service of the main contractor is exempt. Those subcontractor, who are providing service to main contractor, which is taxable, will also be subject to tax.

    Pls clarify whether i am correct.

    thanks and regards

    nss

  55. Rajiv Sharma says:

    Dear Amit,

    Question on Reverse Charge under Works Contract – X ltd takes a construction contract from Y and sub contracts the work to Z. In this Case will X Ltd become a Service Receiver although he is actually service provider who is just sub contracting the work to Z. Please let me know your opinion.

    Regards, Rajiv Sharma

  56. CA VIJAY PANDURANG JOSHI says:

    Dear Amit,

    Thanks for the detailed presentation!

    In one of the case a contractor is constructing a building with material for a educational institution having registered u/s.12A of the Income Tax and also registered under Public Charitable Trust Act.

    However, I am not able to find any scope in the Negative List and/or Mega Exemption Notification for the said contractor. Although the direction/logic of the negative list and/or mega exemption notification sounds to be in his favour.

    Please find out. Regards!
    CA Vijay Joshi

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