Works contract

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CA. Mandar Joshi (Querist)
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27 April 2017 If a dealer has undertaken a Works Contract for which he has purchased material on which he has paid MVAT. can he claim this MVAT on purchases as Input Tax Credit against the Output VAT on WCT invoice? If yes, is partial or full set off available? If no, can it be adjusted against sales without WCT billing? If yes, partially or fully?

Guest

Guest (Expert)

27 April 2017 Where person is paying under Composition scheme provided for Works Contract under MVAT then setoff is allowed as follows :
a) Set- off to the extent of 64% of the Mvat paid where the dealer has opted to pay tax @ 8% on the total contract value.
b) reducing from the amount of setoff a sum equal to 4% of the purchase price on which such setoff is calculated where the dealer has opted to pay tax @ 5% on the total contract value in the case of construction contracts.
However where dealer has not opted for composition scheme then full setoff is available.

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