New User / Register || Book Marks || Annual Subscription || Feed Back ||
Login: Stay
|| Forget Password ||
TMI - Tax Management India. Com  

Recent Discussionss:

Export goods from other manufacturer Service tax applicability on Directors remuneration Payment Made in Wrong Code TDS Payment done 94C instead of 94J Service tax on transport of coal to bio power plant court fee for filing appeal before Commssioner (Appeals) Re: Labour of supply works Service Tax on Services provided in J & K state interest rate on vat tax paid by late Revision/amendment in Shipping Bill
News and Press Release
Home News Commentaries / Editorials Month 5 2007 2007 (5) This
Previous Next

Service Tax and Cenvat Credit on Works Contract

May 27, 2007

Service tax on Works Contract is leviable from 1-06-2007. All assesses providing services of works contract has to choose any one among the following options:

Option A: -       Avail Exemption upto Rs. 8 Lakhs

Option B: -       Opt composition scheme and pay service tax @2.06%

Option C: -       Opt for Regular Service Tax Payment instead of composition scheme

(Note: - "Option B" and "Option C" can also be opted after exhausting the maximum limit under "Option A" if opted)

Before choosing any option, an assessee must analyze the issue of Cenvat Credit involved carefully.

Sometimes "Option C" is more beneficial that "Option B" for the following reasons: -

In Option C -   An assessee who is availing Composition Scheme is not allowed to avail Cenvat Credit on Inputs used in or in relation to such works contract. - (See Rule 3 of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007)

However he can avail Cenvat Credit on Input Services and Capital Goods.

In Option B -    There is no such condition. An assessee can avail Cenvat Credit on inputs / Input Services and Capital goods.

It seems unrealistic but it is true that while claiming deduction for the value of goods transferred from the Gorss Value (under rule 2A of the Service Tax (Determination of Value) Rules, 2006), Cenvat Credit is allowed to be availed simultaneously. There is no bar.



what is new what is new

UpdatesKnowledge SharingSubscription CommunicationNewslettersMore Options

Go to Mobile Website Go To Top
© [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.