Service Tax is adding impact on our day 2 day life in an increasing manner. Previously, Goods Transport Service was difficult 2 understand. Now, "Works Contract" service seems more difficult. What is difficult 2 me, i think it is also difficult 4r others.
Now, I have across an example in Internet which makes us to clearly understand the said service in a very easy way. It prompted me to share wd my net friends at the late night. Those who are sleeping now can read in the morning and afterwards.
The example is like this. We choose pant/shirt piece in the shop of a Tailor and ask him to take measurement of Pant/shirt. The Tailor stitches the same and hands over to us. He never says that u give the price of cloth, button, threads used and tailoring charges. It is a perfect example of "works Contract" service. Likewise, nobody says that he has purchased cement, rods, windows, doors etc, he says that he has purchased a building from a Builder. Construction service comes under "works contract" service. In a new construction the service provider has to pay Service Tax @40% of the value of Goods. If the Builder prefers to treat his service as Builder, he can pay 12.36% S.Tax on the taxable value of 25% of the total price of the Building. Here the abatement is 75% of the total price of the Building.
Like the above example, works contract service consists of goods & service. In goods, there is sales tax charged by the sate Govt and for service component , there is service tax.charged by Union Govt.
As per Constitution of India, the State can levy in the area of taxation demarcated for it and Union Govt of India can levy in area demarcated for them.
The Citizen lives in State which is also in Union and therefore has 2 bear both taxes. Now, the Union of India is planning to introduce GST (Goods & Service Tax) by merging both Sales Tax and Central Excise. The main protagonist of GST is Shri Pranb Mukherjee saheb but he can no more lead the cause. As President of India, his job is now to sign the Bills passed by the Parliament of India, a place where he argued a lot, assured a lot and spoke a lot.
Now, I have across an example in Internet which makes us to clearly understand the said service in a very easy way. It prompted me to share wd my net friends at the late night. Those who are sleeping now can read in the morning and afterwards.
The example is like this. We choose pant/shirt piece in the shop of a Tailor and ask him to take measurement of Pant/shirt. The Tailor stitches the same and hands over to us. He never says that u give the price of cloth, button, threads used and tailoring charges. It is a perfect example of "works Contract" service. Likewise, nobody says that he has purchased cement, rods, windows, doors etc, he says that he has purchased a building from a Builder. Construction service comes under "works contract" service. In a new construction the service provider has to pay Service Tax @40% of the value of Goods. If the Builder prefers to treat his service as Builder, he can pay 12.36% S.Tax on the taxable value of 25% of the total price of the Building. Here the abatement is 75% of the total price of the Building.
Like the above example, works contract service consists of goods & service. In goods, there is sales tax charged by the sate Govt and for service component , there is service tax.charged by Union Govt.
As per Constitution of India, the State can levy in the area of taxation demarcated for it and Union Govt of India can levy in area demarcated for them.
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