> Valuation in detail regarding free issue of materials under the Construction Services> --Value of free supply of material by service recipient is not required to be included in the gross amount for chargeability of Service tax - --The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994; and (b) Value of free supplies by service recipient do not comprise the gross amount charged under Notification No. 15/2004-ST, including the Explanation thereto as introduced by Notification No. 4/2005-ST.
Hi Bhavya, Interestingly, under the Negative List regime of Service tax (w.e.f July 1, 2012), the Abatement Notification No. 26/2012-ST dated June 20, 2012 (effective from July 1, 2012) defines the amount charged shall be the sum total of the amount charged for the service including the **fair market value of all goods and services supplied by the recipient(s) in or in relation to the service**, whether or not supplied under the same contract or any other contract. That means that **fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.**