24 July 2013
Works Contract T clarification Hello! we have executed an order for the supply of electrical switchboard and installation. the supply and service has happened from Bangalore to SEZ in Chennai.the customer has deducted 5% as WCT. we were earlier not informed of this. my query is 1. if we have supplied from Karnataka, is the customer allowed to deduct? 2. The supply invoice and service invoice are separately submitted. can they deduct on the complete purchase order value? 3.Is such deduction of WCT refundable under the I.T. act? Pl reply. Bhavesh Mehta
24 July 2013
generally the works contract tax under vat law shall be applicable only in the case of tax applicable under local laws on executing works contract, in your case the goods are supplied from Karnataka for executing works contract, it shall be treated as interstate works contract liable to tax in the State of Karnataka, therefore the question of TDS in the State of TN does not arise
TDS in all the states excludes turnover of interstate transactions
30 August 2013
Sir, we have received the reply from the customer as below:
Works contract tax is a state subject where right to use of goods is transferred from buyer to seller. In our case, right to use of goods is transferred in Chennai (Tamilnadu) so Tamilnadu VAT/works contract tax is applicable. According to the local law we had deducted WCT - TDS on the time of payment.
30 August 2013
That view is not correct. Let them read the rules. Here the goods and services have come from an interstate dealer. The WCT TDS is to be done under TN VAT Act when making payments to a dealer under TN VAT Act only. The invoice shows that the dealer is in Bangalore.For an interstate works contract,which is regulated by CST Act, tds can not be done under TN VAT Act. Here the tax goes to Karnataka Govt,but tds goes to TN govt. This is wrong. Please explain to them.....mjk
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