Work Contract Tax

This query is : Resolved 

16 August 2010

What is work contract Tax. what is the difference between VAT & WCT.

What is the whole procedure of WCT under delhi VAT.

CMA Ramesh Krishnan (Expert)
16 August 2010

Works contract is applicable for work contractors for those work cannot segregate the Materials and labour

17 August 2010

In fact WCT in Delhi is VAT applicable in the case of work contracts, i.e. contracts involving material supply and activities of erection/commissioning/labour etc.

As per Delhi VAT, in the case of work contracts, tax is payable only on material portion. In case the proportion of material is not determinable, then a standard deduction for labour portion may be reduced from value of work contract and remaining amount is considered as material portion on which DVAT is payable. Like in the case of civil work contracts, there is a 20% deduction allowed for labour portion and hence DVAT is payable on 80% of the work contract value if the material value can not be identified with accuracy separately.

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