VAT - CONSTRUCTION

I understand you question is Your client (say A)  is engaged in construction of residential apprartment. Who purchases materials both inside and outside state and given the material to contractors(say B and C) to execute the work. Subcontractors ( B and C) opts for 70% abatement.  Subcontractors also procured material from outside state.

Here subcontractor has received material from A and also used there own material. Hence his work is not pure service and has to be assessed under VAT for WCT. Now the question I understand is relating to assessment of WCT liability of A.
1. Yes you can deduct amount give to subcontract from taxable turnover (you should take proof that your subcontractor is registered and discharging wct liability on his turnover).
2. Value of services, labour and establishment expenses and profit attributable is deductible (gannon dunkerly case still hold good).
3. Yes, you can avail ecsise duty credit against service tax payable.In that case cost of material will get reduced to the extent credit availed.
4. You can avail credit only when your subcontractor raises Tax invoice on you. your subcontractor can take input tax credit and should raise output tax invoice on you.

Regards
Balaji
balaji_857 @ rediffmail.com
  

hey, not a nice question to ask

hello there Mr. yashwant jain,
This is a forum where all are free to ask any questions ans SURESH had askeda good question and well Balaji has also repled a good answer and if you have something additional to say or reply plz reply it. PLZ do  not undermine or disrespect others by saying "Not a nice question to ask" if you have good knowledge share but donot make these type of comments. I hope in future you will refrain ur self from using these type of comments.
bye
from shivprakash.

The One Says:

Balaji has covered all points I would like to add that in a similar situation that I was involved the perfectly prepared documentation by the client proved to be of paramount importance. Therefore pay attention to complete and through documentation.

One of my Clients has started his construction business... He got a Contract for construction some time back & started with the construction activity without even getting a VAT registeration done.
Now for most of his Purchases done he has been issued a costumer invoice instead of a VAT invoice.. Now would he be eligible to get the VAT credit on his purchases...Since the client is uneducated & did all this in ignorance, how can we help him get credit for Tax already paid by him on his purchases...
Kindly advise

The One Says:

Are you a fellow CA?

As far as my understanding goes VAT rules vary from State to State. However generally speaking, there are benefits for those who get registered on time but not for those who fail to register at the right time. Most importantly, you are not eligible to claim input tax credit of VAT paid on your business purchases. For late registration, you will be required to pay the tax you should have accounted for and interest for the delayed payment.

You could be liable to a penalty as well.

Other opinions are welcome.

Dear Friends, Colud any one solve my confusion. My query is whether the VAT is applicable on material like sand, Concrete in the construction if yes at what rate Suresh ca_suresh134 @ yahoo.co.in

DEAR SIR,

VAT ON CONSTUCTION WORK IS 5% OR 8% . KINDLY CONFIRM