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Vat on dam project aided by world bank

VIJAY SINGH (ACCOUNTANT) (38 Points)

13 January 2017

DEAR SIR, WE ARE A CIVIL CONTRACTOR FIRM . WE HAVE BEEN AWARDED A PROJECT FOR REHABILITATION AND IMPROVEMENT WORK OF A DAM IN JHARKAHND.THIS PROJECT IS FUNDED AND AIDED BY WORLD BANK.WE WANT TO KNOW WHETHER VAT WILL BE LEVY ON THE CONTRACT . OR IT WILL BE A EXEMPTED SERVICE .

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JAGJIT KASHYAP (TAX CONSULTANT) (109 Points)
Replied 13 January 2017

Sir,

As per Entry 12 of Notification No. 25/2012-ST, Service provided to the Government, local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of cannal, dam or other irrigation works exempt from service tax.

Now, coming to VAT, there is no such exemption from payment of VAT by State Government authority but 30% abatement is availible, therefore on only 70% value VAT is payable.

There is another way to clear this position, go to your work order, if there is given that WCT VAT will be deducted from your payment, then it is sure that VAT is applicable.

Hope, It will help you,

Regards.