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Calculation of work contract tax

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Harish Shrimali

Taxation Department

24 Points Posted on 05 November 2013

Dear Members,

Greetings of the day. Let me know that what is the rule to pay vat on works contract in west bengal. Here I would like to clear that we have awarded a work contract from indian oil corp. Ltd. Rate are inclusive of all taxes (as applicable) and its clearly separated on purchase order that rate will be paid against service providing and material supplied. Please also clear that whether there is any restriction to show vat amount in bill raised against the same works contract. Please also specify that in the case of inter state work contract how to calculate the same.

H. Shrimali

Replies (5)

kanagaraj

CHARTERED ACCOUNTANT

952 Points Posted on 06 November 2013

Hi,

The works contract is to split into 2 parts. Material and labour.Normally if you are not able to split then 2/3 is for material and 1/3 is for labour. For 2/3 you have to pay VAT and for 1/3 you have to pay service tax. If you opt for compounding under vat then you are not supposed to take ITC of Raw Materials.

SARJERAO ANANDA JADHAV

Accountant

22 Points Posted on 18 April 2014

method of calculation of work contract tax

satya ranjan senapati

Student CMA

22 Points Posted on 25 October 2014

please details of calculation of works contract tax .

kanagaraj

CHARTERED ACCOUNTANT

952 Points Posted on 25 October 2014

suppose your works contract is for Rs.300000/- and your agreement says that for material value is 250000/- and for labour it is 50000/- then you must pay the VAT for 250000/- and pay service tax for 50000/-. If the agreement is silent then VAT portion is 2/3 of 300000/- is Rs.200000/- and for ST portion 1/3 of 300000/- is 100000/-.