Vat deduction from contractor

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raju kumar (Querist)
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12 March 2012 Dear sir
My question
1.Should i deduct VAT from contractor bill who is providing the service of food supply but he is not showing the any TAX on bill.
what to do?
2.Is VAT return necessary ? if yes then How?

Regards
Raju kumar

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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12 March 2012 Mr Raju Kumar,
TDS from the payments made to a food supplier or cateen contractor is necessary if yours is an industry. Otherwise PSUs and govt & semi-govt bodies are required to do tds from the payments made to their contractors. This rule differs in some states.Please mention your state to know the correct position....MJK

raju kumar

raju kumar (Querist)
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14 March 2012 I belongs to State- Bhar and Department-Health and Family Wellfare(Govt.)

Tks
Raju

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Thanks for the details, Raju Kumar.

Here’s a clear breakdown for your situation (Bihar, Govt. Department — Health and Family Welfare):

### 1. Should you deduct VAT from the contractor’s bill if no tax is shown?

* **VAT is a tax on sale of goods and certain services (like works contract), but food supply services may or may not be VAT-able depending on state laws.**
* If the contractor **is not charging VAT** on the bill, and there is **no VAT registration** or VAT invoice, you **cannot deduct VAT from their payment**.
* **If the contractor is registered and should be charging VAT but isn’t, you may be liable to deduct VAT or take other action, but usually VAT deduction is not from your end; you pay VAT on your purchase/sale.**
* **TDS (Tax Deducted at Source) is different from VAT. TDS applies on payments to contractors if rules mandate.**

### 2. Is VAT return filing necessary?

* Yes, if your organization is **VAT-registered** in Bihar, you must file VAT returns as per Bihar VAT rules.
* You have to file periodic returns (monthly, quarterly, or annually depending on turnover).
* Returns cover your **sales**, **purchases**, and **input tax credit** claims.
* VAT return filing is separate from TDS and contractor payments.

### Additional Notes:

* Since you are a **government department**, you may have specific provisions regarding TDS on payments to contractors.
* Bihar state rules may require **deduction of TDS (not VAT) on contractor payments**, depending on contract type and amount.
* For food supply services, VAT applicability depends on whether food supplied is taxable under Bihar VAT Act.

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### Recommendation:

* Check if the contractor is **VAT registered** and issuing valid VAT invoices.
* Confirm if food supply services are subject to VAT in Bihar.
* If VAT is not charged, **do not deduct VAT**.
* If your department is required to deduct TDS on contractor payments, then you must do so per Income Tax rules.
* File your **VAT returns regularly** if registered.

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If you want, I can help you with:

* The VAT return filing process for Bihar.
* TDS deduction rules applicable to your department.
* Sample formats or links to government portals.

Would you like me to prepare that?

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