Work contract vs service tax

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 August 2011 A business firm doing sales business in a state. now it wants to start contract work in construction field in other states. So which is more preferable to charge? Work contract tax or service tax? And how should It be Taxed and at what rates? For WCT any registration is required?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

15 August 2011 Works contract is one of the services covered under service tax. also it is coming under VAT also

so you can avoid anyone, you need to pay both VAT & Service tax as per rules prescribed by both act

Querist : Anonymous

Querist : Anonymous (Querist)

15 August 2011 so what should be the tax rate of work contract? and how it should be charged in the invoice?

Shyam Lal Naik

Shyam Lal Naik (Expert)

15 August 2011 Service Tax : -

There are 2 alternative

1. Composition Scheme - You have to pay tax @ 4% + 3% Cess on the gross amount.

2. You may claim abetment on the value of materials sold/used in the course of execution of Works Contract and pay full tax @ 10% + 3% Cess on the balance.

You may opt either of the alternative for each contract.

In VAT laws also there are composition Schemes. For rates and computation, you need to check respective state's VAT laws.

Querist : Anonymous

Querist : Anonymous (Querist)

15 August 2011 For this composition scheme any registration or anything is required?

Querist : Anonymous

Querist : Anonymous (Querist)

15 August 2011 Sir, I have started a firm which is in construction field. And i have taken a contract and also completed it. But what should be the tax amount to be charged? my firm is based in Andhra Pradesh and i have executed the work in West Bengal. I have my CST and VAT number oF AP as my firm is based there. Now when i am submitting the AP bill to the firm in West Bengal what tax should i charge? WCT or Service Tax? And what is the amount of tax to be charged along with Cess? the gross bill amount comes to 9000. now how does the tax part come here and what should be charged?

Querist : Anonymous

Querist : Anonymous (Querist)

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

15 August 2011 For doing contract in West Bengal the VAT rules WB shall be applicable to you and not of AP. So get the registration under WB VAT. You have to charge WB VAT Service Tax Registration may be kept the same. In composite contract the expert has rightly said both VAT & SC shall be charges

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