Andhra pradesh sales tax assessment on works contract.

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This query is : Resolved

Ch.Naga Srinivasa Rao (Querist)

08 August 2011 We are the contractors and we have registered under AP Vat act 2005.My Query is whatever i made Inter state purchases for execution of Work in AP.Whether i have to pay full tax on inter state purchases as per AP Vat Schdule at the time of assessment . If we have to pay what is the reason.Please advise.

Sidhardh

Sidhardh (Expert)

10 August 2011 You should pay tax on inter-state purchases made by you as per AP Vat Schdule with in 20 days from the end of the month, in which inter-state purchases made.
You should show value of inter-state purchase turnover in you VAT return under "Exempted Purchases" column.
As you are executing works contract, the turnover of Inter-state purchases should be deducted from your works contract turnover. This deduction is available because you are paying tax on inter-state purchases seperately, so double-taxation is avoided by inserting the provisions.
There is no particular reason for tax payment on inter-state purchases. It's just mentioned in the act. A view is that, by trasacting inter-state purchases, the state government is losing the revenue. However, you are getting 14.5% taxable items at 2% rate against Form C.
No CST input credit can be availed to set-off from VAT Payable.

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