Is service tax applicable on works contract?

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].

What is the service tax rate for FY 2015 16?

12.36%
What is the Rate of Service Tax for 2015-16 and 2016-17

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.

What is negative list under service tax?

Negative List of Service Tax: Under Section 66D of the Finance Act 1994, a negative list of services have been outlined, which are deemed to be exempt from service tax. Any service provided that does not come under the purview of this list is liable to be levied with service tax.

How is tax calculated on contract work?

Thus, the rate of TDS from payments made by the government or other specified persons to any contractor will be 2% or 1% of the gross payment or, as the case may be, the net payment, depending on the terms of the contract. The rate is 1.5% or 0.75% for transactions from 14 May 2020 until 31 March 2021.

Is GST applicable on Labour contract?

GST is applicable on all goods and services, including the service of the labour contract.

What is the rule of service tax?

Generally, the liability to pay service tax has been placed on the ‘service provider’. However, in respect of the taxable services notified under Sec. 68(2) of the Finance Act,1994, the service tax shall be paid by such person and in such manner as may be prescribed at the rate specified in Sec.

Who is responsible to collect the service tax?

Person liable to pay service tax is governed by Service Tax Rules, 1994 he may be service provider or service receiver or any other person made so liable. It is an indirect tax wherein the service provider collects the tax on services from service receiver and pays the same to government of India.

Who is liable for service tax?

service provider
Generally, the liability to pay service tax has been placed on the ‘service provider’. However, in respect of the taxable services notified under Sec. 68(2) of the Finance Act,1994, the service tax shall be paid by such person and in such manner as may be prescribed at the rate specified in Sec.

Which of the following is not included in the negative list of service tax?

As per sub-clause (i) of clause (a) of section 66D services provided by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services carried out on payment of commission on non government business are excluded from the negative list.

Do you pay tax on contract labor?

Contract Labor and Your Small Business Taxes The earnings of a person who is working as an independent contractor are subject to the self-employment tax. For tax purposes, you must provide these individuals with the IRS form 1099-MISC and provide the IRS with Form 1096 to show how much you paid them.

When does service tax on work contract come into effect?

With effect from 1st October, 2014 [ Notification No. 11/2014 Dated 11 July, 2014 ]: In Rule 2A of the Service Tax (Determination of Value) Rules, 2006, category “B” and “C” of works contracts are merged into one single category, with percentage of service portion as 70%; this change has come into effect from 1 st October, 2014.

Is the works contract service subject to VAT?

The works contract service has always been a subject matter of debate or discussion, either in computation of tax under VAT Act or under Service Tax Act and more importantly after the introduction of reverse charge mechanism, where both service provider and service recipient is the person liable to pay tax.

Who is liable for service tax under works contract service?

However, for paying service tax under works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service.

What are the exemptions for works contract tax?

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