VAT on Contruction Work

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 June 2010 Dear Sir/Madams,
Say, ABC Pvt. Ltd.,a construction company,undertakes renovation contract worth Rs.20,00,000/- for residential unit.

As per service tax 67% abatment is there on Full Rs.20 Lakhs.

I want to know what is the liability of VAT on this contract. VAT should be levied on bill to customer. What are the conditions of VAT? I have read about Work Contract Tax also on this? What it is?

Shyam Lal Naik

Shyam Lal Naik (Expert)
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28 June 2010 The vat & works contract tax are the same tax. The rates/composotion scheme are state specific. A short description of works contracrt tax : -

WCT is a tax on transfer of property involved in excution of works contract.

For example, when a contractor undertakes to construct a building, materials like Bricks, cement, TMT Bar, stone chips, sand etc gets transfered to the contractee.

"By a legal fiction, vide amendment to Art. 366 of the constitution, such transfer are treated as deemed sale, and States were given power to impose sales tax(now VAT) on such transfer.

It is a VAT, although popularly termed as WCT"

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