Works contract

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M Inam (Querist)
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04 November 2013 My client is in Karnataka, building and selling residential flat he is just issuing bills against receipt of advances without any bifurcation of land, material and labour......... what % of service tax and Vat he should pay on advances as he is receiving from his customers..........and which scheme is better composition/ works contract / regular one.

Please any one answer my query.....

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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04 November 2013 I am not fully aware of Karnataka VAT, but generally the provisions in all the states are more of less similar.

As per WBVAT, works contract where the components cannot be segregated, 1/3 is deemed to be labour services and the balance 2/3rds is subject to VAT. I am sure the provisions of KARNATAKA VAT ACT would be more or less similar.

Service tax on Construction of residential complexes - and commercial complexes, entitles availment of abatement at 70% or 75% as the case may be and service tax on the balance amount is payable @ 12.36%.

For VAT the registration should be under thye head "Works Contractor' and under Service Tax the service head should be Construction of residential complexes - and commercial complexes.'

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M Inam

M Inam (Querist)
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09 November 2013 Thanks you sir

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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10 November 2013 You are most welcome Mr. Inam.

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