Gst - works contract - itc

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Works Contract Service ( Contractor) - To Govt., Local Municipal Corporation (Roads, Sewers etc.)

Is Input Tax Credit Available on Goods purchased and used like Cement, Sand etc.???

How to Calculate GST on the Contract Value?

Contract Amount Rs. 1 Lakh

GST @ 12% would be 1 Lakh x 12 % = 12000/- { TAX EXCLUSIVE }

or

GST @ 12% would be 1 Lakh x 12 / 112 = 10714/- { TAX INCLUSIVE }

(AMOUNT RECEIVABLE from GOVT. i.e. CONTRACT VALUE is Rs. 1 Lakhs Only. No Extra Amount in the Name of TAX can be recovered.)

 

Kindly Quote Any Relevant Notification or Section.

Thanks.

Replies (5)
1. Refer Sec 17(5) to know about restricted input tax credits. ITC paid on Purchase of inputs like cement, sand etc, will be allowed to you as there is no restriction on it in your case.

2. Refer your contract, if it mentions that the contract amount is exclusive of all taxes or it mentions that taxes are applicable separately then GST shall be 12% on 1 lakh.

Sir, Its Final. Contract Amount is the Final Amount 1 Lakh. No Extra Money will be payable on the Name of Tax.

So I should go for Inclusive Method 1 Lakh x 12/112, Right??

 

 

Thanks 

If your contract is not mentioning this phrase "plus applicable taxes" or any similar phrase, then you have to go for inclusive method.
If your contract is not mentioning this phrase "plus applicable taxes" or any similar phrase, then you have to go for inclusive method.
One issue that previously govt used to deduct entire VAT before paying to contractors.
But know how will be the situation and usage oof ITC

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