Wct in coimbatore - sez
This query is : Resolved
25 November 2011
We have an SEZ unit in coimbatore. We have made some civil interior furinishing and construction in that unit. so my query is, whether we have to deduct the Works Contract Tax (WCT) or not. As we have a exemption letter for payment of service tax, VAT and CST. Please reply.
Thanks in advance.
Thanks in advance.
25 November 2011
Mt. Nagaraju,
You should not deduct any tax from the bills of the contractor as you are exempted.
MJK
You should not deduct any tax from the bills of the contractor as you are exempted.
MJK
25 November 2011
Mt. Nagaraju,
You should not deduct any tax from the bills of the contractor as you are exempted.
MJK
You should not deduct any tax from the bills of the contractor as you are exempted.
MJK
25 November 2011
Thank you Sir.
But we have deducted the TDS (u/s 194C)and deposited the same. The vendor is not charging us VAT and Service tax becuase we have an exemption certificate.
But we have deducted the TDS (u/s 194C)and deposited the same. The vendor is not charging us VAT and Service tax becuase we have an exemption certificate.
25 November 2011
Thank you Sir.
But we have deducted the TDS (u/s 194C)and deposited the same. The vendor is not charging us VAT and Service tax becuase we have an exemption certificate. So we are not suppose to deduct WCT on civil interior furnishing and construction.
But we have deducted the TDS (u/s 194C)and deposited the same. The vendor is not charging us VAT and Service tax becuase we have an exemption certificate. So we are not suppose to deduct WCT on civil interior furnishing and construction.
03 August 2025
You're correct in your understanding — let’s clarify your situation with a precise legal and practical explanation.
---
### ✅ Your Scenario:
* You're an **SEZ unit in Coimbatore (Tamil Nadu)**.
* You're undertaking **civil, interior furnishing, and construction work**.
* You possess a **valid exemption certificate** under SEZ provisions for **VAT, CST, and Service Tax**.
* You're **not being charged VAT or Service Tax** by the vendor.
* You **have deducted TDS under Section 194C**, which is **income tax**, not VAT.
---
### 🧾 Now, about **WCT (Works Contract Tax)**:
#### 🔹 What is WCT?
WCT is essentially **VAT on the transfer of property in goods involved in the execution of works contracts**.
---
### ❓ Should WCT Be Deducted in Your Case?
#### ✅ **Answer: No**, if:
* You have a **valid SEZ exemption notification or letter** from the Tamil Nadu Commercial Taxes Department.
* The vendor **is not charging VAT/WCT**, as per the SEZ exemption.
In that case, **you are not required to deduct WCT** on vendor bills.
---
### ✅ Deduction of **TDS under 194C**:
* This is **separate from WCT**.
* TDS under **Section 194C** of the **Income Tax Act** must still be deducted **if the contract exceeds ₹30,000 (single) or ₹1,00,000 aggregate per year**.
* So your action of **deducting and depositing TDS is correct** and in line with the law.
---
### ⚠️ Important Compliance Tip:
You should **retain a copy of your SEZ exemption certificate** and attach it to your vendor payment files. This will:
* Protect you during assessments or audits.
* Serve as proof for **non-deduction of WCT**.
---
### 📌 Summary:
| Tax Type | Deduct? | Remarks |
| ------------------------- | ------- | -------------------------------- |
| **WCT (VAT on WC)** | ❌ No | Exempt due to SEZ status |
| **Service Tax** | ❌ No | Exempt via SEZ notification |
| **Income Tax TDS (194C)** | ✅ Yes | Must deduct if threshold crossed |
---
Let me know if you’d like a **sample declaration format** from the contractor affirming **non-applicability of WCT** — often helpful for recordkeeping.
---
### ✅ Your Scenario:
* You're an **SEZ unit in Coimbatore (Tamil Nadu)**.
* You're undertaking **civil, interior furnishing, and construction work**.
* You possess a **valid exemption certificate** under SEZ provisions for **VAT, CST, and Service Tax**.
* You're **not being charged VAT or Service Tax** by the vendor.
* You **have deducted TDS under Section 194C**, which is **income tax**, not VAT.
---
### 🧾 Now, about **WCT (Works Contract Tax)**:
#### 🔹 What is WCT?
WCT is essentially **VAT on the transfer of property in goods involved in the execution of works contracts**.
---
### ❓ Should WCT Be Deducted in Your Case?
#### ✅ **Answer: No**, if:
* You have a **valid SEZ exemption notification or letter** from the Tamil Nadu Commercial Taxes Department.
* The vendor **is not charging VAT/WCT**, as per the SEZ exemption.
In that case, **you are not required to deduct WCT** on vendor bills.
---
### ✅ Deduction of **TDS under 194C**:
* This is **separate from WCT**.
* TDS under **Section 194C** of the **Income Tax Act** must still be deducted **if the contract exceeds ₹30,000 (single) or ₹1,00,000 aggregate per year**.
* So your action of **deducting and depositing TDS is correct** and in line with the law.
---
### ⚠️ Important Compliance Tip:
You should **retain a copy of your SEZ exemption certificate** and attach it to your vendor payment files. This will:
* Protect you during assessments or audits.
* Serve as proof for **non-deduction of WCT**.
---
### 📌 Summary:
| Tax Type | Deduct? | Remarks |
| ------------------------- | ------- | -------------------------------- |
| **WCT (VAT on WC)** | ❌ No | Exempt due to SEZ status |
| **Service Tax** | ❌ No | Exempt via SEZ notification |
| **Income Tax TDS (194C)** | ✅ Yes | Must deduct if threshold crossed |
---
Let me know if you’d like a **sample declaration format** from the contractor affirming **non-applicability of WCT** — often helpful for recordkeeping.
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