works contract tax liability

2166 views 2 replies

kumar

Executive

99 Points Posted on 28 July 2009

Our‘s is a engineering spares manufacturing company (SSI Unit) in AP, we set up our unit in a rented premises in industrial estate, recently we purchased a land to set up our own establishment, started construction of Industrial shed, problem raised when the contractor submitted his RA Bill No.1, we deducted only TDS and pay the balance amount to contractor but one of my friend told me that I done a mistake, He said deduct TDS @ 2.266% and works contract tax @ 4% on bill amount. I don’t know about works contract tax, is it correct or not, I want to know what is the procedure of return filing for works contract tax, Please mention complete procedure.

Replies (2)

D.P.Pattnaik

manager( taxation)

100 Points Posted on 28 July 2009

works contract tax( wct) is a tax on deemed sale. it is under the stat vat. u have to file return like vat & to deposit the tax as per vat.

author

78 Points Posted on 31 July 2009

If "B" got the contract from “A” (EPC-Engineering ,Procurement and Construction) of Rs.100.00 and “B” is having the 0% deduction approval certificate of WCT-TDS from department after that he Subcontract the same in Rs.95.00 to "C"

So the Queries is :-

1) In the EPC there is any scenario that 85% value of contract is taxable under WCT and the 15% amount is taxable in serivce tax. How is the treatment of the same in VAT and Service Tax.

2) If “C” has charge the WCT/Service on Rs.95.00 to “B” , “B” will able to get the Input Benefit of WCT / Service Tax.? Pls guide me weather he has charge WCT on 85% and Service Tax on 15% or any other option.

3) In the above case , when "B" billed to his customer, what is the treatment of Rs.5 in WCT which is his profit because there is no material and labor cost.

4) Please guide us about the Service Tax and WCT / VAT Implication on the above case.