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Work Contract Tax on Service Tax

DEBARAJ JENA (CA) (59 Points)

05 October 2008

Whether WCT need to be deducted from service tax value included in gross value of work

For Exp: If a civil contractor renders service worth Rs.1.00 L and billed to including ST Rs. 1.04 L.

Whether the contrctee needs to deduct WCT on Rs.1.04 L or only Rs.1.0 L ?

Similar doubut whether TDS needs to be deducted from Rs.1.04 L or only Rs.1.0 L?

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10 Replies

RICHA SHARMA (CA ) (202 Points)
Replied 05 October 2008

service tax is to be deducted on the gross amount charged. In the example cited by u the gross amount charges is Rs. 1.04 L hence service tax should be charged on Rs. 1.04L which works out to be Rs. 0.04 by using the below mentioned formulae -

(1.04*4%)/104

Please include the appropriate amount for education cess and SHEC in the above calculations

Moreover. TDS shall be deducted on the amount charged including service tax i.e. on Rs. 1.04L

1 Like

ram udgar roy (taxation) (28 Points)
Replied 06 October 2008

wct deducted before service tax & tds deducted including service tax

DEBARAJ JENA (CA) (59 Points)
Replied 06 October 2008

Originally posted by :RICHA SHARMA
"	Thanks Richa. We are doing the same. But this query arises in my mind, since we have to pay Tax on Tax.	"

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 11 October 2008

I agree with Mr. Ram U. Roy.

CA V. Mohanakrishnan (Chartered Accountant) (401 Points)
Replied 13 October 2008

there is direction from the Board that TDS need not be deducted on the service tax component as it is a remittance to the authorities and not the income of the biller.

DEBARAJ JENA (CA) (59 Points)
Replied 03 November 2008

Originally posted by :CA V. Mohanakrishnan
"	there is direction from the Board that TDS need not be deducted on the service tax component as it is a remittance to the authorities and not the income of the biller.	"

Can you give the details of Board direction for quote (I can put it before my client about this)

(Guest)

Dear Sir/madam

Is WCT & Service Tax different for EPC contracts for engineering projects required for production/transportation of crude oil. Both are applicable for a particular contract or they are substitute to each other.

(Guest)

Originally posted by :DEBARAJ JENA
"	Whether WCT need to be deducted from service tax value included in gross value of work For Exp: If a civil contractor renders service worth Rs.1.00 L and billed to including ST Rs. 1.04 L. Whether the contrctee needs to deduct WCT on Rs.1.04 L or only Rs.1.0 L ? Similar doubut whether TDS needs to be deducted from Rs.1.04 L or only Rs.1.0 L?	"

lingam (Manager-Accounts) (120 Points)
Replied 06 March 2009

Dear Sir,

I am a Transport Contractor , Whether Work Contract Tax is applicable to me or not, one of my customer has deducted TDS on WCT is it correct or not? if yes then how will i claim my TDS amount.

Please help

Thanks & Regards

Mr.Lingam