Chapter: 3.5 Valuation of Taxable Services (Section 67)

Valuation of Taxable Services (Section 67)

The value of taxable service is:
i. in cases where consideration is in money; the gross amount charged by the service provider for such services provided or to be provided;
ii. in cases where consideration is not wholly or partly consisting of money, such amount in money as, with the addition of service tax charged, is equivalent to the consideration;
iii. in cases where the consideration is not ascertainable, the amount as determined in accordance with The Service Tax (Determination of Value) Rules, 2006.

Value of services for the purpose of works contract services

Works Contract transaction consists of supply of material and labour. The service tax is chargeable only on services and not on the sale of material. Examples of work contract are:

a. Erection, commissioning and installation of plant and machinery
b. turnkey projects including engineering, procurement and construction or commissioning (EPC) projects e.g. Electric material supply and fittings

All the contracts of me nature are subject to levy of service tax.
* Value of taxable service for works contract services shall be equivalent to gross amount charged for works contract less value of transfer of property in goods involved in execution of said works contract.
* In case VAT or Sales Tax is paid on actual value of transfer of property in goods involved in execution of works contract, then such value adopted for payment of VAT to be taken as value of transfer of property for determining the value of works contract service as referred above.