We are registered as a private limited company and undertake interior works for builders. At what rate should we charge service tax from July 1? Is reverse charge applicable to us?
– Mahendra Mandal
The services provided by you will fall under finishing services under the works contract, which is a declared service as per section 66E Clause (h).
As per Clause ii(c) of notification no. 24/2012-ST dated 6.6.12, which is reproduced below, and amended rule 2A of the Service Tax (Determination of Value) Rules, 2006, you will have to charge service tax on 60% of the amount charged.
(ii) Where the value has not been deter portion involved in the execution of the works contractmined under clause (i), the person is liable to pay tax on the service
(A) in the case of work contracts entered into for execution of original works, service tax shall be payable on 40% of the total amount charged for the works contract
(B) in the case of works contracts for maintenance or repair or reconditioning or restoration or servicing of any goods, tax shall be payable on 70%
(C) in the case of other works contracts not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property, service tax shall be payable on 60%
If you are a private limited or a limited company, Notification no. 30/2012-ST dated 20.6.12 for payment on reverse charge bases is not applicable as this notification holds in the case of individuals, a Hindu undivided family, partnership firm, body of individuals.
The writer is with M Sheth & Co, a chartered accountancy firm in Mumbai.
He can be reached at email@example.com