ACompany which have works contract. They are engaged with VAT,Service tax,WCT,Tds etc. When party make payment say Rs. 100000 after tds(didnt get certificate), Accountant calculate service tax on Rs. 100000 and for the same amount they are paying VAT quaterly @ 3%.
(1) Which are the items to exclude and include for calculating service tax?
(2) Is it correct way of accounting?
(3) Some party may make advances, in that case how to calculate service tax.
Please answer with ACt if possible
Dear Korath,
VAT and Service Tax both are different in nature. While service tax on works contract is charged @ 10% on 1/3 rd value of contract or 4% on full value of the contract(Compounding method), whereas the VAT is to be paid on the balance 75% value of the contract. The basic concept in works contract is 75% of the WC is sale and balance is labour charges. So the 75% of the WC is treated as sales and 25% is treated as service. The same treatment is taken for advances also
regards
So if it is compounding method then we should make service tax @ 4%.
my question is
(1)How to bifurcate service tax, tds and vat on a receipt by the party.
in the case of tds they will give certificate.
(2) to get correct fig is it needed to add back tds on the above receipt.
Suraj Garg and Associates
New Delhi
CA Inter
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Synergy Keystone
Mumbai
CA
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CCI
Pro
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