Composite tax

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Harsha.H (Querist)

26 August 2012 Dear Experts,

kindly tell me, what will be the Portion of VAT in a works contract, Where Materials also supplied along with the services given?

thanks and regards,

RENGARAJ R.K

RENGARAJ R.K (Expert)

26 August 2012 The word works contract itself is a composite of material and labour. The state vat act (you have not mentioned the state) says that there are two schemes. One is composition scheme, in that the dealer has to pay 2% or 4% as the case may be for the total amount of the works contract without ITC benefit.

Second, you have to pay for the material value (at the rate prescribed in your state vat act) only.

Harsha.H

Harsha.H (Querist)

26 August 2012 My question is concerned with Maharashtra State.

Here, the vendor is charging out of total value, 33% is considered as labour charges and service tax is levied on the labour charge at 12.36% and remaining 67% is considered as material value and 12.5% VAT is charged.

is this correct?

Vineet

Vineet (Expert)

27 August 2012 It depend on from which state you are dealing in..in case service provider not able to segregate the service and material part in that case some percentage is fixed as by state government for example in bangalore its 75% & 25%..

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