Works Contract

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 June 2010 Good Evening All,
I have a doubt about Works Contract.
For Example:- Our cliant charge a bill under composition schme,
Net amount is Rs. 100/- (without Tax)
from this Rs. 100/- he charged
VAT @ 8% on Rs. 67/- (Material Supply) = Rs 5/- and
Service Tax on Rs. 33/- (Labour Supply)= Rs. 3/-
Total bill amt. is Rs. 108/-

So is this a works contract?
On which amt. we should deduct TDS?
and what is WCT Tax which should be deducted on it?
Because I heard that WCT Tax is also should be deducted on Bill Amount.

Please give me Your Valuable advise.

CA V. Mohanakrishnan

CA V. Mohanakrishnan (Expert)
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09 June 2010 This is not under the composite scheme. He has opted for the bifurcation of the material and labour and tax at full rates

The service tax rate for works contract under the composition scheme is at 4%.

The VAT rate depends on the state in which the registration of the assessee exists

Where composite scheme is opted VAT normally cannot be shown separately in the invoice as corresponding credit to the purchaser is not available. Depends on the state VAT act.

TDS needs to be deducted on the complete bill less Service tax (composite)when invoice is under the composite scheme