Hi All,
I have a query regarding the material issued to Contractor on Chargeable Basis. Here is the detailed query:
We have hired a contractor in our factory. According to the work contract we negotiated that we will pay him Rs. 100,000 (for example)p.m. less amount of material issued by us to him. For the entire month say we issued him material worth Rs. 20,000. So at the end of the month his bills is like this:
Gross Amount: Rs. 100,000
Less Material Issued: Rs. 20,000
Net payable: Rs. 80,000
So, Now my question is does Rs. 20,000 worth of material issued by me amounts to sale and am i liable for VAT.
Second question is on what amount should the contractor levy service tax i.e. will it be Rs. 100,000 or Rs. 80,000.
I hereby request to kindly reply to this at the earliest. Thanks a lot
CAclubindia
