urgent.....
This query is : Resolved
jayant singh kalra
(Querist)
08 January 2011
difference between contract & works contract
& applicability in service tax
& applicability in service tax
B R Ramesh
(Expert)
08 January 2011
the work contract means
the work carried over useing MEN & METERIAL to compleate the project.
like construction of road & bridges & dams, Residential & commercial building or any fabrication, laying, eraction , installation of men & material.
rate of VAT is 4% under composition scheme for the whole invoice amt
rate of servixe tax is 4.12% under compmosition scheme for the whole invoice amt
CONTRACT
the work is alloted to the different person by the principle employer to carry out the project on behalf of the organisation.
the work carried over useing MEN & METERIAL to compleate the project.
like construction of road & bridges & dams, Residential & commercial building or any fabrication, laying, eraction , installation of men & material.
rate of VAT is 4% under composition scheme for the whole invoice amt
rate of servixe tax is 4.12% under compmosition scheme for the whole invoice amt
CONTRACT
the work is alloted to the different person by the principle employer to carry out the project on behalf of the organisation.
jayant singh kalra
(Querist)
08 January 2011
will in contract & work contract both service tax & vat will apply
RAMESH KUMAR VERMA
(Expert)
08 January 2011
On certain Works Contracts both VAT (WC) & Service Tax are applicable on the Contract price since there involves the transfer of property in goods (sale of goods / materials) subject to VAT levied by the State Government and rendering of Taxable Service subject to Service Tax levied by the Central Government. Thus, the both the state & the Central Governments levy VAT & Service tax on the same taxable base i.e. Contract Price, respectively.
The Contracts /Taxable services where both VAT and Service Tax are applicable are shown as under:-
Construction contracts, Civil Jobs
Annual Maintenance Contracts (AMCs)
Errection of Plant and Machinery etc.
Please note that in such Works Contracts / Taxable Services, the working for levy of VAT & Service Tax is to be done, separately, as per the provisions of VAT & Service Tax. Only in the case where the Contractor opts for A-1 legal option of actual labour deduction method, he can pay Service Tax on the actual labour portion and VAT on actual Material value. Otherwise only A-2 (Standard deduction) and B (Composition Tax) options are available under VAT and No deduction for levy of Service Tax for the Contractor. The Abatements are available under the Service Tax law for specific Taxable Services towards the value of material / goods involved in the same. Like 67% Abatement from the contract value is available under the Construction Services.
The Contracts /Taxable services where both VAT and Service Tax are applicable are shown as under:-
Construction contracts, Civil Jobs
Annual Maintenance Contracts (AMCs)
Errection of Plant and Machinery etc.
Please note that in such Works Contracts / Taxable Services, the working for levy of VAT & Service Tax is to be done, separately, as per the provisions of VAT & Service Tax. Only in the case where the Contractor opts for A-1 legal option of actual labour deduction method, he can pay Service Tax on the actual labour portion and VAT on actual Material value. Otherwise only A-2 (Standard deduction) and B (Composition Tax) options are available under VAT and No deduction for levy of Service Tax for the Contractor. The Abatements are available under the Service Tax law for specific Taxable Services towards the value of material / goods involved in the same. Like 67% Abatement from the contract value is available under the Construction Services.
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