The government of Rajasthan has made radical changes in the Works Contract Tax Liability for contracts awarded in Rajasthan for the F. Y. 2015-16. This includes WCT liability on the Contractor as well as TDS deduction liability on the awarder of the Contractor. We are noting below the provisions for easy understanding of the Works Contract liability in Rajasthan:-
METHOD OF CALCULATION OF WORKS CONTRACT TAX
(A) VAT Method
(i) With Proper Books of Accounts
(ii) Without Proper Books of Accounts
(B) Exemption Scheme – Flat Rate of Works Contract Tax
(i) Option A - All taxable goods purchased from Registered Dealer of Rajasthan
(ii) Option B – Others
(C) TDS Liability under Works Contract on the Awarder of Works Contract
DETAILS CALCLATION OF WORKS CONTRACT TAX IN EACH METHOD
(A) VAT Method
Step 1: Calculation of Taxable Turnover
(i) With Proper Books of Accounts
Taxable Turnover = Gross Value (Excluding cost of Land) – Non Taxable Component
Non Taxable Component includes following:-
a. Value of the goods on which no tax is leviable under the Act;
b. Value of Exempted goods;
c. Labour and Service Charges for execution of Works;
d. Charges for planning, designing and architect’s fees;
e. Charges paid for obtaining on hire or otherwise, the equipment or machinery, tools used for execution of works contract;
f. Cost of consumables such as water, electricity, fuel used in the execution of works contract, where the property is not transferred in the course of execution of the works contract;
g. Cost of establishment of the contractor to the extent it is relatable to supply of labour and services;
h. Other similar expenses relatable to the said supply of labour and services, where the labour and services are subsequent to the said transfer of property; and
i. Profits earned by contractor to the extent it relates to supply of labour and services.
(ii) Without Proper Books of Accounts
Taxable Turnover = Gross Value (Excluding cost of Land) – Prescribed Labour Portion as per Table below
|
S. No. |
Type of Works Contract |
Prescribed % of Labour Charges in Gross Value of Contract |
|
1 |
Fabrication and installation of Plant & Machinery |
25 |
|
2 |
Fabrication and erection of structural works of iron and steel including fabrication, supply and erection of iron trusses, purlins and the like. |
15 |
|
3 |
Fabrication and installation of cranes and hoists |
15 |
|
4 |
Fabrication and installation of rolling shutter and collapsible gets |
15 |
|
5 |
Civil Works like construction of building, bridges, roads, dams, barrages, canals and diversion |
30 |
|
6 |
Installation of doors, door frames, windows, frames and grills |
20 |
|
7 |
Supply and fixing of tiles, slabs, stones and sheets |
25 |
|
8 |
Supply and installation of air conditioners and coolers |
15 |
|
9 |
Supply and installation of air conditioning equipments including deep freezers, cold storage plants, humidification and plants and dehumidors |
15 |
|
10 |
Supply and fitting of electrical goods, supply and installation of electrical equipments including transformers |
15 |
|
11 |
Supply and fixing of furniture and fixtures, partitions including contracts for interior decorators and false ceiling |
20 |
|
12 |
Sanitary fitting for plumbing and drainage or sewerage |
20 |
|
13 |
Laying underground or surface pipelines, cables or conduits |
30 |
|
14 |
Supply and erection of weighing machines and weighing bridges |
15 |
|
15 |
Painting, polishing and white washing |
25 |
|
16 |
All other contracts not specified from S.NO. 1 to 15 above |
25 |
Note: The percentage is to be applied after deducting the cost of land from the total value of the contract; and (ii) Quantum of tax separately charged by the contractor and included in the Gross Value.
Step 2: Division of Taxable Turnover in different categories in proportion of the different categories (Tax Rate Wise) of Local Taxable Purchases used as input in the Works Contract.
Step 3: Calculation of Tax Liability on each Division of Taxable Turnover by multiplying with the applicable Tax Rate for the respective portion of Taxable Turnover.
Step 4: Tax Payable = Tax Liability – Input VAT paid
(B) Exemption Scheme – Flat Rate of Works Contract Tax without claiming Input Tax Credit
A dealer may opt for payment of Exemption Fees in lieu of Tax Payable on the transfer of property in goods (whether as goods or in some other form) involved in the execution of Works Contract under any of the following two options, to be exercised within 60 days from the date of award of the works contract:-
Option A – Subject to the conditions mentioned below, a dealer may opt to pay a flat Exemption Fees at the rate mentioned in column 3 of the Table below:-
|
Item No. |
Category of Works Contract |
Exemption Fee (% of the total value of the contract) |
|
(1) |
(2) |
(3) |
|
1. |
Works contract where the cost of goods involved in execution of works contract does not exceed five percent of the total contract amount. |
0.10% |
|
2. |
Works contract relating to construction and repair of roads, runways, bridges, dams, drains excluding sewerage system, tunnels, canals, channels, barrages, railway tracks, causeways, sub ways, diversion, spill ways, boundary walls, buildings and water harvesting system. |
0.75% |
|
3. |
Works contract related awarded by Rajasthan Vidyut Prasaran Nigam Ltd, JVVNL, AVVNL, JVVNL |
0.75% |
|
4. |
Any other kind of works contract not covered by item no. 1 to 4 above. |
2% |
Conditions:-
a. The dealer, shall purchase all taxable goods within the state (Rajasthan) from a registered dealer of the state for the execution of works contract;
b. In case if such dealer, procure or purchases any goods in any manner other than the manner provided in condition 1 above, he shall in addition to the exemption fees be liable to pay an amount equal to the amount of tax that would have been payable had the goods been purchased in the state (Rajasthan) from a registered dealer.
Option B – A dealer may opt to pay a flat Exemption Fees at the rate mentioned in column 3 of the Table below:-
|
Item No. |
Category of Works Contract |
Exemption Fee (% of the total value of the contract) |
|
(1) |
(2) |
(3) |
|
1. |
Works contract where the cost of goods involved in execution of works contract does not exceed five percent of the total contract amount. |
0.70% |
|
2. |
Works contract relating to construction and repair of roads, runways, bridges, dams, tunnels, canals, channels, barrages, railway tracks, causeways, sub ways, diversion, spill ways, drains excluding sewerage system. |
4% |
|
3. |
Works contract related to construction and repairs of buildings, boundary walls, sewerage system, sewerage treatment plant, water supply works, water harvesting structures |
5% |
|
4. |
Works contract related awarded by Rajasthan Vidyut Prasaran Nigam Ltd, JVVNL, AVVNL, JVVNL |
3.50% |
|
5. |
Works contract related to setting up of new enterprise or expansion of existing enterprise manufacturing fertilizer within the state with minimum investment of Rs. 2500 Crores |
1% |
|
6. |
Any other kind of works contract not covered by item no. 1 to 5 above. |
6% |
Note – A dealer who has opted for payment of Exemption Fees in lieu of Tax under Option B shall be entitled to purchase the goods involved in execution of works contract from outside the state of Rajasthan.
(C) TDS Liability under Works Contract on the Awarder of Works Contract
(i) Who is Liable for deduction of TDS under Works Contract?
An awarder;
a. who is a Department of any Government, a corporation, a public undertaking, a cooperative society, a local body, a statutory body, an autonomous body, a trust or a private or public limited company, limited liability partnership, and
b. the gross amount of works contract(s) awarded by him in a year exceeds rupees ten lakhs.
(ii) Rate of TDS on Works Contract
|
S. No. |
Type of Contractor/ Condition |
Rate of TDS under Works Contract |
|
1. |
A Dealer registered under the Rajasthan VAT Act, 2003 |
6% |
|
2. |
Unregistered Dealer not covered under 1 above |
7% |
|
3. |
Where Exemption Certificate is provided by the Contractor |
Rate prescribed in the EC |
(iii) The Awarder has to provide the TDS certificate in Form VAT 41 to the Contractor on Quarterly Basis, and the same shall be reduced from the Works Contract Tax Payable by the Contractor.
NOTE – This summary is prepared for only preliminary and general understanding of the Works Contract Tax Liability in Rajasthan, however it is not comprehensive and it is suggested to take personal opinion to assess your Works Contract Liability on case to case basis.
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