New rate of service tax for contractor and sub-contractor w.e.f. date?

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w.e.f 01.04.2007. the new rates for service tax is applicable to contractor and sub-contractors
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  • Pinu answered 7 years ago
    It is 12.36%
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  • taxpert answered 7 years ago
    It appears U R looking for service tax rates on Works Contract.Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 have been notified vide Notification No.32/2007-Service Tax. The person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to two per cent. of the gross amount charged for the works contract. Gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid on transfer of property in goods involved in the execution of the said works contract.

    Subject to the provisions of section 67, the value of taxable service in relation to services involved in the execution of a works contract shall be determined by the service provider in the following manner vide Notification No.29/2007-Service Tax:

    ( i) Value of works contract service determined shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.

    Explanation.- For the purposes of this rule,-

    (a) gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract;

    (b) value of works contract service shall include,-

    (i) labour charges for execution of the works;

    (ii) amount paid to a sub-contractor for labour and services;

    (iii) charges for planning, designing and architect’s fees;

    (iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;

    (v) cost of consumables such as water, electricity, fuel, used in the execution of the works contract;

    (vi) cost of establishment of the contractor relatable to supply of labour and services;

    (vii) other similar expenses relatable to supply of labour and services; and

    (viii) profit earned by the service provider relatable to supply of labour and services;

    (ii) Where Value Added Tax or sales tax, as the case may be, has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then such value adopted for the purposes of payment of Value Added Tax or sales tax, as the case may be, shall be taken as the value of transfer of property in goods involved in the execution of the said works contract for determining the value of works contract service under clause (i).
    Click on the link below for details
    http://www.allindiantaxes.com/ait-news-9...

    Source(s):

    www.allindiantaxes.com
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  • CA,S K somani answered 7 years ago
    The question I presume related to applicability of Service Tax to contractors or sub contrators and does not related to TDS(Income tax) on contractor or sub contractor.
    In the Service Tax rules there is no definition of Contractor or Sub contractor but the liability to Service tax is based on the specified service provided by any commercial concern .
    To quote : Repair and maintenance service, Installation services etc . are falling into the service tax ambit.
    The annual turnover of RS 8 lacs is exempted from service tax and the new rate of service tax is 12.36% (incl. of Education cess 3%) . Also Cenvate on the input services paid may be taken credit . For details the web site of the Service Tax may be reffered.

    Source(s):

    The Finance Act 2007 and service tax notifications
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