28 May 2015
In case of Works Contract, a consolidated invoice is raised for VAT & Labour. The client is registered under composition scheme for VAT purposes, then Composition Tax is collected @ 4% on total contract value and paid to the Government. The actual labour is about 30% of the project value. But as per ST rules, Taxable service in case of non-original works contract is 70% of the contract value. Please suggest whether he has to collect ST only on 30% of the contract value or 70% as per ST rules.
Also Can he raise two separate invoices for labour & VAT? If so, then as per COT, tax should be collected on total consideration of the contract, which will be 100% of the contract value. Then one invoice will be 100% of contract value for COT & 30% of contract value for ST, which will impact my turnover in books. Please guide.
03 June 2015
Thanks Mr. Kumar Gaurav. But as per the work order, the actual labour component is only 30% of the project which is chargeable for ST. So, charging ST on 70% will be high cost for the project. Please suggest.
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