Service tax on works contract
This query is : Resolved
15 October 2013
Hello all,
I am little confuse about wct deduction.
is anybody there who can help me?
I have to raise to bill to our contactee under works contract. and confusion is that we have to deposit wct on behalf of contactee they have been paid full amount to us inclusive all taxes. I have to raise rs. 600000 invoice which includes service and wct as well. Should i calculate wct4.2% on contract value+ service tax included or only on contract value. because if contractee would deduct wct, it would be on total value included service tax. than make a payment.
I am little confuse about wct deduction.
is anybody there who can help me?
I have to raise to bill to our contactee under works contract. and confusion is that we have to deposit wct on behalf of contactee they have been paid full amount to us inclusive all taxes. I have to raise rs. 600000 invoice which includes service and wct as well. Should i calculate wct4.2% on contract value+ service tax included or only on contract value. because if contractee would deduct wct, it would be on total value included service tax. than make a payment.
Guest
Guest
(Expert)
16 October 2013
For that you have to tell me in which state you are paying works contract tax under VAT? Liability differs from one state to other.
24 July 2025
Hey! Regarding **Works Contract Tax (WCT) deduction in Haryana** and your confusion on whether to calculate WCT on the contract value including service tax or excluding it, here’s the clarification:
---
### Key Points:
1. **WCT (Works Contract Tax)** is a **state-level tax** on works contracts (like Haryana VAT or similar state VAT laws).
2. **Service tax** is a **central tax** applicable on the service portion of works contract and is charged separately.
3. When raising your bill, you usually show:
* Contract value (inclusive or exclusive of service tax, depending on billing practice)
* Service tax separately charged on the service portion
* WCT deducted by the contractee as per state rules
---
### In Haryana (and generally in most states):
* **WCT is calculated on the *contract value excluding service tax*.**
* The logic:
Service tax is a **central tax** and should not be included in the taxable base for **state VAT or WCT**.
* So, if your contract value is Rs. 600,000 (excluding service tax), and say service tax applicable is on the service portion (for example 14% of labor component), the **WCT should be calculated only on Rs. 600,000, not on Rs. 600,000 + service tax**.
---
### What you should do:
* Raise invoice for Rs. 600,000 (contract value)
* Add service tax separately on service portion
* The contractee deducts WCT @ 4.2% on Rs. 600,000 (contract value excluding service tax)
* Service tax paid by contractee to you is separate and not part of WCT calculation
---
### Reference:
* Haryana VAT rules specify that **taxable turnover for WCT excludes service tax**.
* You can check Haryana VAT WCT notifications or circulars for confirmation.
---
If you want, I can help draft the invoice or find official circulars for Haryana WCT. Does that help?
---
### Key Points:
1. **WCT (Works Contract Tax)** is a **state-level tax** on works contracts (like Haryana VAT or similar state VAT laws).
2. **Service tax** is a **central tax** applicable on the service portion of works contract and is charged separately.
3. When raising your bill, you usually show:
* Contract value (inclusive or exclusive of service tax, depending on billing practice)
* Service tax separately charged on the service portion
* WCT deducted by the contractee as per state rules
---
### In Haryana (and generally in most states):
* **WCT is calculated on the *contract value excluding service tax*.**
* The logic:
Service tax is a **central tax** and should not be included in the taxable base for **state VAT or WCT**.
* So, if your contract value is Rs. 600,000 (excluding service tax), and say service tax applicable is on the service portion (for example 14% of labor component), the **WCT should be calculated only on Rs. 600,000, not on Rs. 600,000 + service tax**.
---
### What you should do:
* Raise invoice for Rs. 600,000 (contract value)
* Add service tax separately on service portion
* The contractee deducts WCT @ 4.2% on Rs. 600,000 (contract value excluding service tax)
* Service tax paid by contractee to you is separate and not part of WCT calculation
---
### Reference:
* Haryana VAT rules specify that **taxable turnover for WCT excludes service tax**.
* You can check Haryana VAT WCT notifications or circulars for confirmation.
---
If you want, I can help draft the invoice or find official circulars for Haryana WCT. Does that help?
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