works contract under m vat for subcontractor

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divakar (Querist)
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03 March 2010 Company A have given contract to Company B for civil, interior and other work for Rs.90,00,000/- lakhs. Company B has given subcontract of civil work of Rs.45,00,000/- lakhs to Company C.Company C is a new Company.

1.What is the procedure for Company C to take Works Contract No under MVAT ACt and under service tax
2.Company C want to bill subcontract under composie Scheme What is rate of tax and what form it should issue to main contractor Company B
3.Whether main contractor will deduct TDS
4.Whether Company C can avail all set off on its purchases.
5.How much service tax Company C should charge to contractor Company B

CA Umesh Sharma

CA Umesh Sharma (Expert)
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05 March 2010 Ans 1: No WCT No. is required to be taken, MVAT TIN is sufficient for Company C.
Ans 2:Under composition Scheme rate of tax is 5% for civil contracts. Form 406 and 408.
Ans 3: No TDS deductiable by Principal contractor of Sub contractor.
Ans 4: C Company can avail setoff on its purchases with retention of 4% under Composition Scheme.
Ans 5: Please check i with other service tax expert.

Please note that if, principal contractor is under composition scheme, sub contractor is also required to under composition scheme.

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