WCT & SERVICE TAX

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kaushik thacker (Querist)
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16 July 2011 WE ARE A MANUFACTURING INDUSTRIES WE GIVE A CONTRACT FOR CANTEEN BUILDING & ADMIN BUILDING CONSTRUCTION WITH MATERIAL ON 20000000/- CONTRACTOR GIVE 1ST RA BILL OF RS 600000/- AND S.TAX @ 4.13 CHARGED & ALSO VAT @0.6%. IS IT OK? THEY CAN CHARGE THESE S.TAX & VAT ON BILL.

Sunil Mate

Sunil Mate (Expert)
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16 July 2011 Yes, the contractor can charged the Service Tax & VAT on Same bill.

Considering you have given the Contract alongwith Material. Means the Bill issued by the Contractor is having the portion of Material and Labour Charges.

As per VAT Act, There are some conditions for preparation of Bills. If the contractor knows the portion of Material & Labour, he has to charge the Vat at the Rate Applicable and Service tax on Labour Portion. if he does not know the Protion of Material and Labour then it is assumed that the Material Protion is 67.67% and Labour Protion is 33.33%, then he has to charge vat on 67.67% and Service Tax on 33.33%.

There is also a provision of composition scheme for contractor in maharashtra state in which he does not have to bifercate the Material & Labour and will require to charge VAT @5% or 8% on Bill Amount.

Also for any Works Contract above Rs.5,00,000/- in a year, you have to deduct the WCT-TDS @2% for Registered Dealer & @4% for Unregistered Dealer. There is no WCT - TDS for Work Contractor Out of State.

Hope you statisfied.

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