Can on a work contract both service tax & vat be applicablle

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Querist : Anonymous

Querist : Anonymous (Querist)

05 March 2016 Question raised after seeing SIXTH SCHEDULE of Section 4(1)(c) under VAT Act since few IT services, Programming, Software are chargable under VAT as far as I knows, these are chargable under Service Tax Too. The scope of this question is not only IT Service but also other work contract too.

For Eg.
Point No. 11. Programming and providing of computer software - VAT Appliable
Point No. 2 Dyeing and printing of textiles.
Point No. 6. Lamination, rubberisation, coating and similar processes, 1[including powder coating.]
Point No. 14. Service and maintenance of IT products including Telecommunications equipments specified in serial number 53 of Third Schedule.
Point No. 15. Sizing and dyeing of yarn
Point No. 21. Tyre retreading

Nilesh

Nilesh (Expert)

10 March 2016 Since we have aspect based taxation - there can be multiple tax on same transaction... in case of works contract there are 2 aspects - supply of goods and provision of services. Hence, in case of works contact VAT cannot be charged on full value neither service tax can be charged @ full rate.

Querist : Anonymous

Querist : Anonymous (Querist)

12 March 2016 What are the criteria to decide when vat or service tax will be applicable and how much % of contract value, vat or service tax will be applicable when it would not be possible to divide service portion and other portion

Nilesh

Nilesh (Expert)

14 March 2016 Typically, there are 3 methods provided:
- Standard Deduction - wherein govt as provided percentage for value of goods and services
- Actual deduction - based on actual expenditure and profit thereon
- composite rate

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