Author: CA Tarannum Khatri


Meaning of Work Contract “Work 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 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.-SEC 65(54) of Finance Act, 1994. Scope of work contract work contract is joint contract in which service is provided and some material is also transfer as sale. Vat should be payable on transfer of material.So activity of sale under contract is necessary. Following activities are covered under work contract: commission, erection and installation of plant, machinery, equipment, structure ; construction of buildings; turnkey projects; maintenance services -AMC contracts; Job work contracts. Valuation for service tax: Method Tax rate Input tax credit Calculate value as per rule 2A(i) of service tax rules, 2006 14.5% Input services and capital goods, input consumed during work contract Pay service tax under rule 2a(ii) 14.5%*40%/70% Input services and capital goods, input consumed during work contract       Note that cenvat credit for duty paid on material on which vat is paid and property in goods is transferred is not available.  *Budget 2015 service tax rate update Service tax calculation as...

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ExemptionsFollowing educational services are exempt. Pre school educational and education up to higher secondary school or equivalent Education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force. Recognized by law meaning:It means recognized by any university (under UGC act) .If private centers recognized by university, the services will be exempt.In CCE vs. Tandem Integrated services , center provide coaching to students who appear for university examination.After completion  of coaching , fees are shared with university. It has held that services will be exempt.  Approved vocational educational course: Approved courses means courses run by an industrial training institute or an industrial training center affiliated to National council for vocational training.A course run by NSDC set up by the government will be subject to service tax. with effect from 10/5/2013. Transport services provided by school to students are exempt because it is naturally bundled service. services of training in the field of arts,culture or sports are exempt. as per Sr. no. 8 Notification No 25/2012. International schools and boarding schools giving international certificate like IB up to HSC and boarding schools are also exempt. Taxable services: Private coaching Placement services Postal coaching  online coaching Exemption to auxiliary services: services provided  to an educational institutions by way of  Auxiliary services  Renting of immovable property services  are exempt from service tax.Sr no 9...

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According to financial act ,1994 , section 66E(i) , Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner is DECLARED SERVICE. What is taxable? Service portion while supplying the food is taxable under service tax act.Value of food on which vat is levied is not taxable under the act. Exemption: Services provided for serving of food or beverages by restaurant, eating joint or mess which has no air conditioning or central heating facility are exempt from service tax. w.e.f. 1/4/13. Services to an educational institution by way of catering under mid day meals scheme sponsored by government are exempt. Notification no 25/2012 , sr no 9 (a). Before 1/4/13, there were two conditions for taxability under food related services The restaurant should have AC or central heating And The restaurant serves alcoholic beverages. The second condition is removed with effect from 1/4/13. So now all the restaurant which has AC or heater are liable to pay service tax. In spite of this, small service provider exemption is available to them. Service Tax on 40% value: The restaurants with AC or central heating are required to pay service tax on 40% of the value of services. So rate will be 4.944%. CBEC circular no 139/8/2011 Sometimes service provider has more than...

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