Input credit on service tax under works contract

We are architectural designing firm and in the process of entering into a new contact for designing a office in a brand newly constructed building. We wish to charge service tax under works contract on 40% - as original work- Is it ok to charge service tax at 40% as original work( we are doing a complete designing and building work  as  a turnkey project like  Flooring, Carpets, Air-conditioning, security access control, Electrical, painting, Furnishing etc as well as designing layouts etc for the new office.

Also please let me know how input credit can be taken for the same.

sadanand marathe
Asked 1 year ago in Service Tax from Greater Mumbai, Maharashtra
Yes you can. 
Yours case can be covered under reverse charge mechanism wherein 50% of the service tax liability will be borne by the service receiver, provided you are a individual, HUF or a Partnership Firm and the service is provided to a body corporate located in the taxable territory. If any of the above two conditions are not fulfilled, you will have to pay the entire service tax as usually done.
Swapnil Patil
CA, Navi Mumbai
29 Answers
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Dear Sir,

Yes, you can surely claim under Works Contract but it is difficult to claim input tax credit in such cases. To claim Input Service tax you can prepare two separate invoices and charge Service Tax in full on the service component.

Trust this clarifies your query.

Feel free to call back/ get back in case of further clarifications.

Thanking You.

Rohit R Sharma
Rohit R Sharma
CA, Mumbai
1250 Answers
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Dear Sadanand,

you can charge service tax under works contract head. However, I am not able to understand the input tax credit part. This service tax will be your output liability.

Are you talking about input tax credit for the service receiver?

Thanks and Regards,
CA Abhishek Dugar 
Abhishek Dugar
CA, Mumbai
1342 Answers
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