Clarification on works contract tax (wct)

VAT (Legacy) 651 views 2 replies

SMRUTIRANJAN SAMAL

CEO

36 Points Posted on 17 August 2015

I have the following queries in respect of Works Contract Tax (WCT). Please answer.

1) Who should handle Works Contract Tax (WCT)? Contractor or Principal or both ?

2) Whether Contractor should charge WCT to the Principal over and above the contract amount / bill ? If yes, then what’s the role of Principal?

3) Or the Principal should deduct the WCT as TDS from the bill of the Contractor?

4) When should WCT be applied ? (On each bill or at the end of the contract during final bill or financial year wise?

5) Where WCT is to be deposited? (in the Contractor’s state or Principal’s state)

Replies (2)

CA VIRAL SANGHVI

Finance head

681 Points Posted on 17 August 2015

Hiiiii

Your answer are

1) Who should handle Works Contract Tax (WCT)? Contractor or Principal or both ?

Both

2) Whether Contractor should charge WCT to the Principal over and above the contract amount / bill ? If yes, then what’s the role of Principal?

it is deducted like TDS, so it is part of the bill.

3) Or the Principal should deduct the WCT as TDS from the bill of the Contractor?

4) When should WCT be applied ? (On each bill or at the end of the contract during final bill or financial year wise?

On each bill where there is work which falls under definition of works contract.

5) Where WCT is to be deposited? (in the Contractor’s state or Principal’s state)
in the contractor state by the principal.

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MJ Krishnamurthy

ACCT(Retd)

7197 Points Posted on 18 August 2015

Mr S Samal,The answers to your queries are: (1)It is the contractor who should handle i.e.collect and pay the WCT tax. (2)The WCT tax is payable on the total value of the contract(value of goods).The Principal is the customer for the contractor.If he is a govt ,semigovt or PSUs or an authorised one,they can do TDS. (2a) TDS is done only in the case intra-state WCT and not interstate works contract.TDS should be deposited to the same govt by the Principal and issue a certificate to the contractor for making necessary deductions out of payments to the Govt. (3)The WCT tax should be charged and collected in each bill,whenever there is some transfer of property in goods. (4)The WCT tax is to be paid to the State Govt where such work is being executed.....mjk