Vat on works contract

Dear Friends,

Please clarify the levy of VAT on Works Contract, whether it is levied on invoice/cash basis or accrual basis.

i.e, whether VAT is payable only on Advances received from the customer or VAT is payable also on advances receivable from customers.....in case of construction contracts.

Replies (3)

Hi,

 

In the case of Works Contract Vat is payable only when the property in goods is transferred from the Contractor to Awarder. Using during the contract period the Awarder may pay Mobilization Advance to the Contractor. VAT is not required to be deducted on such Advances but TDS has to be Deducted.

Dear Anil,

In case of advances received from customers under a construction contract...what is the treatment.

whether vat is payable on advances receivable or only on advances received/invoiced.

Dear Sidharth,

In construction contract, when you receive advances from a customer, VAT will be payable on such receivables. 

To the extent of my knowledge, this is followed In case of Karnataka VAT.

With regards,

Subramanya

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