We are in process of Constructing a Factory, wherein, we are going to give following contracts to following people.
1. Person 1 - Factory Wall and Office Construction
2. Person 2 - Unit I and Unit II Construction
3. Person 3 - Unit III and Unit IV Construction
4. Person 4 - Main Gates, Shutters and Office Interiors, POP ceiling etc.
Now, we have given Contract to all above labour contractors as Labour with Materials. Means, we are not going to provide them anything, they have to execute the work on their own like buying all building materials such as cement,sand,steel,pipes etc.
In this case, what kind of Taxation should be executed?? TDS should be deducted on what amount? Service Tax to be paid on what amount? Any VAT to be charged to us. None of above person carry any firm, they are local mistri. Bu they carry PAN CARD and Saving A/Cs, so currently we are paying them cheque payment and deducting 1% TDS on whatever amount paid.
Whether we should issue them Labour Contract or Works Contract.
Look forward to hear you.
Thank you.
Kindly give us advise how to handle this
CAclubindia
