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Tax on Payment to contractors

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(Querist)
09 June 2010 An educational trust running educational activities, constructing buildings for educational purpose. The contract of construction is given to labour contractor whose payment is more than 15 lacs for the year. is any sales tax deduction required? At what rate? what will be organisation's liability for sales tax?
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
09 June 2010 If the construction materials are purchased by the trust in their own name and the said materials are made available at the work site by the trust and if the contract is only for labour ,provisions of VAT will not attract since there is no transfer of property from contractor to trust. If there is a written contract, words like materials should be supplied free of cost etc should be avoided.This is general law as far as VAT is concerned. However the respective state VAT law has also to be referred.
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CA. BIJENDER KR. BANSAL

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CA. BIJENDER KR. BANSAL (Expert)
09 June 2010 Work Contract Tax will be applicable in this case, which is also regulated by Sale Tax Dept.
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