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Vat on works contract in orissa

ATUL KAKKAD (ADVOCATE) (30 Points)

06 June 2012

Dealer in Orissa is regd under VAT act having valid T I N for execution of works contract and supply of plant machinery. Dealer

effects purchase from outside state of Orissa and supplies goods to steel plant. No bills raised for this supply . Civil works executed .Labour percentage claimed at 30 % and balance taxable at 13.5% output vat . Bills raised and payments received and Input vat claimed on local purchaes . Dealer claims the goods(that were supplied to steel plant) were USED IN EXECUTION of works contract and claims no liability of payment of VAT .

My understanding is as dealer has effected purchases from outside the state of Orissa he has to pay entry tax and also raise bill locally of supply to the steel plant and show output vat and then go ahead and claim input and pay balance . Am I correct ?

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3 Replies

Sunil Kumar Pattnaik (Mgr. Finance) (42 Points)
Replied 27 July 2012

if the dealer has contract for execution of works contract, then he is bound to raise invoice for material and the executed works for the contract in one invoice, wherein, he will deduct the material part from the gross amount of work done and calculate the service tax @ 12.36% on the labour component. Now the WCT will be deducted @ 4% or the rate may be according to the Low Deduction Certificate, on the gross amount of work done and the service tax derived from the labour component. He cannot raise seperate invoice for material and execution of works in this contract.

If the dealer has seperate contract for supply and execution of works then, he is free to raise seperate invoices. Now it means the materials supplied for execution of works is from the Contractor and not from the Contractee. In the invoice for execution of work, the material component now must be NIL and WCT will be deducted on the gross value of work done and service tax on the gross value of work.

Hope this will somehow clearify your querry.

Ravindra Kumar (Accountant) (233 Points)
Replied 13 November 2015

Dealer in Orissa is regd under VAT act having valid T I N for execution of works contract and supply of plant machinery. Dealer effects purchase from outside state of Orissa and supplies goods to steel plant. No bills raised for this supply . Civil works executed .Labour percentage claimed at 30 % and balance taxable at 13.5% output vat . Bills raised and payments received and Input vat claimed on local purchaes . Dealer claims the goods(that were supplied to steel plant) were USED IN EXECUTION of works contract and claims no liability of payment of VAT . My understanding is as dealer has effected purchases from outside the state of Orissa he has to pay entry tax and also raise bill locally of supply to the steel plant and show output vat and then go ahead and claim input and pay balance . Am I correct ?

Read more at: /forum/vat-on-works-contract-in-orissa-205071.asp#

Attached File : 887253 20151113125635 orissa sate vat form402a.pdf downloaded: 256 times

Ravindra Kumar (Accountant) (233 Points)
Replied 13 November 2015

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