Work contract

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HIREMATH A S (Querist)
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17 November 2010 Dear Sir,

We are developing one commercial complex, purchasing materials and issuing to subcontractors vide tax invoices. We are taking input credit whatever out put tax is their(Material issued to subcontractor)

Now VAT dept. people said it is not correct.

What is the procedure, please help me on this.

gautam kumar vaish

gautam kumar vaish (Expert)
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17 November 2010 it all depends upon the type of registration. if your are registered as a works contractor, you are not eligible for making sale & purchase.

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HIREMATH A S

HIREMATH A S (Querist)
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17 November 2010
Sir,

In Registration both are added. Work Contractors-Developers & Traders

SAMEER

SAMEER (Expert)
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17 November 2010 NO, Please remember work contract includes sale of material. Material is being purchased by you and supplied free of cost to the subcontractor: This transaction involves transfer of property from Main contractor to the Owner of the project, as the material is being consumed in his project. Now the contractor is liable to pay tax on sale of goods involved in the execution of work contract to his principal (Owner).

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