30 April 2013
Hi, If Company 'A' is giving a civil contract to company 'B' for Rs. 100 and out of which 'B' sub-contract the work of Rs. 20 to Company 'C'. Then what is Position/duty/liabilities of company A/B/C, severely and jointly.
03 August 2025
Here’s the breakdown of WCT (Works Contract Tax) liability in the scenario: Scenario Recap: Company A awards a civil contract worth ₹100 to Company B. Company B subcontracts ₹20 worth of work to Company C. WCT Liability & Position: 1. Company A (Principal Contractor) Responsible to deduct WCT on the entire contract value paid to Company B (₹100). Must deposit WCT with the government and issue TDS certificate to Company B. Even if B subcontracts part of the work, A’s liability remains on the full ₹100. 2. Company B (Contractor & Subcontractor payee) B receives ₹100 from A, and subcontract ₹20 to C. B will receive ₹20 from C for subcontract work. B is responsible to deduct WCT on ₹20 paid to C (subcontract value). B must deposit WCT on ₹20 and issue TDS certificate to C. 3. Company C (Subcontractor) C receives ₹20 from B. C’s WCT liability depends on whether C further subcontracts or not. If C is a subcontractor with no further subcontracting, then C is liable to pay WCT on the work it performs if applicable (depends on local laws). Usually, subcontractors pay WCT on their own contract value if they receive direct payments. Summary of WCT: Party WCT Liability Remarks Company A Deduct WCT on ₹100 paid to B Deposits & issues TDS certificate Company B Deduct WCT on ₹20 paid to C Deposits & issues TDS certificate Company C Pays WCT on work done (₹20) If no further subcontracting Joint and Several Liability? Normally, each payer is responsible to deduct WCT on payments made to contractors. In case of failure to deduct or deposit, liability can be on the payer (Company A or B). Subcontractor C is liable for its own tax dues on its income. Authorities can pursue recovery from each party separately but no automatic joint liability unless specific provisions. Important: WCT provisions vary by state. Check the specific state’s WCT Act for rates, thresholds, and procedures. Some states do not require WCT on subcontracted amounts or allow credit for subcontract payments.
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