New Work contract rates of 4 percent change effective from 1st March, 2008

Doubts were raised whether the changes of the rates on the work contract services revised in the Budget 2008, from 2% to 4% would be effective from 1^st March, 2008 in cases of ongoing contract i.e. where these services were agreed to be provided prior to 01.03.08 but the actual provision of the services took place after 01.03.08.

 It has been clarified by CBEC that the service tax becomes chargeable on receipt of the payment and on the amount for receipt.  Therefore, it is to clarify that the rate of 4% is applicable for the work contract where the payment of service is receipt on or after 01.03.08.