Service Tax on labour charges
I have been entrusted for a works contract amounting to 1 lakh for making furnitures. I have service tax registration. Now, I have procured all the required materials and asked a local carpenter to make the furniture's. He charged The local carpenter charged Rs 25 thousand excluding service tax for the same as he did n't have any service tax registration.
Now, as per the Notification No. 30/2012-Service Tax , New Delhi, the 20th June, 2012, in respect of services provided or agreed to be provided in service portion in execution of works contract, percentage of service tax payable by the person receiving the service is 50% and the same for the person providing service.
But in my case I know that the local carpenter who did the work won't pay his due amount. Now, my question is ,
1. should I pay 50% as mentioned in the circular or 100% tax to avoid any future consequence?
2. What will happen during assessment if I pay service tax on 50% as mentioned in circular?
An early reply will be appreciated ,
Asked 2 years ago in Service Tax from Kharagpur, West Bengal
It is only in the hands of a company assessee, that joint charge mechanism is applicable. From the question it is not clear if you are a company. But otherwise you have to pay service tax after claiming abatement of 60% and pay service tax on balance value of contract @ 14%. This is under works contract service.
Talk to Vijay N. Kale
4.9 on 5.0