What is difference between works contract and service contract?
What is difference between works contract and service contract?
Simply put, a works contract is essentially a contract of service which may also involve supply of goods in the execution of the contract. E.g. if a sub-contractor, undertakes a sub-contract for the building work, it would be a works contract in relation to immovable property.
What happens if service tax is not collected?
If an assessee has not filed his or her service tax return, then a late payment fee of Rs 500 will be charged for the initial 15 days of delay. If an assessee has not filed his or her service tax return, then a late payment fee of Rs 1,000 will be charged for delays ranging from 15 to 30 days.
Is work contract tax applicable after GST?
Examples of works contracts are the construction of a new building, erection, installation of plant and machinery. The article covers applicability of GST on works contracts in detail….GST Rate on Works Contract.
| Description | HSN Code | GST rate |
|---|---|---|
| Works contract mostly involving earth work to government | 9954 | 5% |
Why is it important to distinguish between a contract of service and a contract for service?
There is, however, no single conclusive test to distinguish a contract of employment from a contract for services….Contract of service vs. contract for service.
| Contract of service | Contract for service |
|---|---|
| Includes terms of employment such as working hours, leave benefits, etc. | Statutory benefits do not apply |
Can penalty under service tax be waived?
Service Tax Penal Provisions Frequently Asked Questions However, Section 80 of the Finance Act, 1994, states that penalties can be waived off if the assessee in question can furnish reasonable evidence or proof that can provide justification of failure to make payment of service tax.
What is work contract service?
Works contract means a service contract involving supply of goods to execute the contract. Hence, works contracts are a mixture of service and transfer of goods. Examples of works contracts are the construction of a new building, erection, installation of plant and machinery.
Is the service portion of a works contract taxable?
By this inclusion, the service portion in a works contract has become taxable under the Service Tax provisions. Though, “Works Contract” is not expressly found in Section 66D “Negative List of Services” but there is one indirect reference to “Works Contract”.
Do you have to pay VAT on service contract?
Rule 2A (i) of the said rules, provides that value of service portion in the execution of a works contract shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract. However, such gross amount charged shall not include VAT/Sale Tax.
Are there any judgements on construction and works contract?
A compilation of various Judgments of Service Tax and VAT on relevant issues in works contract and construction sector is made. Stands of High court is highlighted on complex issues arising in Constructions and taxation of works contract.
How is works contract divided in prior tax regime?
In previous tax regime, the Works Contract is required to be divided into two parts one for “Sale of Goods and other for “Supply of Services. The one part attracts State Act and other part Central Act. Since even after implementation of GST, the question of “Works Contract”, has not simplified.