Gautham
asked
How do we calculate the tax bifurcation for the VAT and Service Tax?
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Vinod.P
answered
Dear Gautham
Your question need some more clarification to give a correct answer.
1.If there is pure service , service tax @ 14% will be charged
2.In case of a pure sale, VAT will be collected as per the rates prescribed in the sate VAT Act.
3. If there is both sales and service, in the same invoice, VAT Can be collected for the products sold or consumed, and Service Tax can be collected for the labour/Service part.
4. For works contract Services in which both material and labour is involved, the following methods can be followed
a) As mentioned in point No 3.
b) If it is a new work and if the value of Material and labour could not be exactly bifurcated, 60% of the total cost can be considered as material cost and VAT can be charged @ 60% of the rate prescribed and Service Tax @ 5.6% (40% of 14) can be collected.
c) If it is a maintenance work, material will be considered only 40% and Labour 60% then service Tax will be 8.4% and VAT will be 40% of the rates prescribed.
Regards
Vinod.P
