Works Contract Tax

1775 views 2 replies

Ahujab

13 Points Joined March 2007

One of my clients is engaged in work contract (local as well as central) of laying pipeline for domestic water and irrigation projects. The terms of contract are say Rs.10/- per meter. In this case, the time period of contracts varies between 10 days to 180 days. The bill for work contract is raised eiter partially or fully after verification of work by the officials of the concerned contractee. Therefore, transfer of property in the goods can be transferred only after verification and raising of bill. The material is also provided by the contractor. The question is how to send the goods at site for construction work when there is no sale. What documents should be used.

Another question is that Under Delhi VAT, in case of indivisible projects of labour and material, specific deduction of 25% or more is allowed for labour and job work for computation of taxable turover. What is position in case of projects executed out of delhi.

Can 'C' or 'D' forms be issued by the contractee for concessional purchase of material.

Pls reply somebody quoting relevant rules or sections where applicable.

Thx
Bhim Ahuja

Replies (2)

Balaji

B.Com

48 Points Joined March 2007

I am from orissa,

Section/rule arrangement are different from state to state, howerver basic scheme is same throughout india.

In case of work cotnract transfer of property takes place when goods are appropriated. I.e used in execution, for sake of calculation and administrative convinience WCT is assessed after billing.

One can take balance material left from site, by there challan supported by declaration.

Regards
Balaji

finsuraj

34 Points Joined May 2007

Transfer of propertyn takes place at the time of incorporation by theory of accretion. C Forms can be issued by contractee for which it is advised to have the price break in the contract separately for supply and services portion. Facility of D forms has been withdrawn w.e.f 1st April 2007. In case goods are not moving as result or incident of contract, they can be taken as stock transfer or as inter state purchase as applicable. Provision of 25% deduction is applicable where assessee opts for it or when the value of labour and other charges eligible for deduction can not be determined from the accounts of the assessee. It has nothing to do with indivisible conntract as assessee can still claim deductions on actual basis even in indivisible contract provided deductions claimed can be proved from accounts. Provisions regarding this vary from State to State but basically the type of deductuions admissible are same in all the States (these deductions are as SC judgement in GDC case) and fixed percentages allowed (like 25% in Delhi) vary from contract to cotnract and State to State. Suraj Prakash