Section 3(1) in The Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007
(1)Notwithstanding anything contained in section 67 of the Act and rule 2A of the Service (Determination of Value) Ru1es, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to two per cent of the gross amount charged for the works contract.Explanation. - For the purposes of this rule, gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid on transfer of property in goods involved in the execution of the said works contract.
