Work contract

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pravin (Querist)

20 October 2011 What is Work Contract , What is the Difference Between work Contract & Sales, and Vat is Applicable in Work Cotract ?

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

20 October 2011 Mr. Pravin,
Sale is simple transfer of goods aginst some consideration(money).When you involve some labour also along with sale then it becomes a works contract(e.g.construction of house, building body of bus,fixing electrcal fittings etc). VAT is leviable on the value of goods transferred in a works contarct.
MJK

CA Mayur zanwar

CA Mayur zanwar (Expert)

21 October 2011 When the activity is composite in nature which includes price for goods and labour , job work..etc work contract comes into picture.. In sale there is only transfer of goods / material.

For vat computation in work contract their are various methods .. put logically we have to see that vat is required to be paid on the sale value of material portion in the total contract value..

if the material used are of different rates
eg. steel 5% , cement 12.5% than proportionately we have to decide our sale value...

Ca Mayur Zanwar

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