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Works contract tax on service tax

Jerry (CMA) (35 Points)

23 March 2017

Dear experts ,

my company is going to make payment to a works contractor, on which amount we have to deduct WCT ;

1) Total amount inclusive of service tax ?

2) Amount excluding service tax?

My company is registered as awarder under Kerala Commercial Tax

Please answer

Thanks

Jerry

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11 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 23 March 2017

Amount excluding service tax, unless the contract value is inclusive of it.

1 Like

Jerry (CMA) (35 Points)
Replied 24 March 2017

Thanks for the reply sir,

Asper Letter of Indent, The contract value of subject work shall be Rs.xxxxxxx inclusive of all taxes and duties service tax and works contract tax.

In purchase order, they listed all the items and arrived at a total, on that total they calculated service tax, this amount (base total + service tax) is the contract value asper Letter of indent. In this case what will be amount on which i have to calculate WCT.

sivadas chettoor (CA) (2644 Points)
Replied 24 March 2017

The law casts duty to deduct from every payment made and there is no express provision for deduction of service tax. To the best of my knowladge there is no circular also in this matter.

1 Like

Jerry (CMA) (35 Points)
Replied 24 March 2017

Thank you so much for your prompt reply,

Again i have 1 doubt, our contractor is a sole propritor , we pay service tax under 50% reverse charge mechanism, that means we are paying value of work done + 3% (after abatement) to the contractor. We pay the remaining 3 % to CBEC under RCM. Whether we have to deduct WCT on total 106% of value of work done ?

Jerry (CMA) (35 Points)
Replied 24 March 2017

Sachin (Accountant) (30 Points)
Replied 24 March 2017

For Example (First & Final Bill)

	For Seller Bill details
		Gross bill Value	Rs. 10,00,000.00
		Sale Tax (WCT @ 6%)	Rs. 60,000.00
		Service Tax @ 15% on 40% of Gross bill	Rs. 60,000.00
		Total bill Value	Rs. 11,20,000.00

	For Purchaser (Deduction)
		WCT @ 6%	Rs. 60,000.00
		Service Tax (under RMC for Prop.)	Rs. 30,000.00
		TDS (on Total Bill Value)	Rs. 22,400.00
		Payable Amount	Rs. 10,07,600.00

Note
	*Service Tax deduction is only applicable for prop. Company. Under RMC scheme.
	**in Work Contract Deduction of TDS on full bill, if theirs pure labour work, then TDS will deduct on gross bill value.
	**Rate of WCT deduction as State Standard may be change accordingly.

Ajay Singh (HR/ Administration Manager) (23 Points)
Replied 24 March 2017

Hi Sir, We are a non for profit organisation/NGO located in Gurgaon, Haryana, Recently we got some civil work done related with renovation and construction of builiding from a registered contractor. We would like to know that while making payment to contractor we should deduct the WCT or we can pay him in full as per bill submitted post deducting only 2% TDS ? In past we have paid him post deducting 2% TDS on each payments but WCT he use to deposit in govt. account. and later he submit those deposit challans to us as proof of deposit made by him. Now we want to know that whether NPO/NGO/non profit trust need to deduct WCT from bill and need to deposit by our self to govt. But if, this is the case then we want to know how to do it because we don't have any VAT no. with us as because we work for special childrens education who are mentally challanged and we are a registered as non profit trust. Please share your opinion with supporting govt. notification or documents proving your opinion. With Great Regards.

Read more at: /experts/wct-applicability-if-contractee-or-customer-is-npo-ngo-2450949.asp

Deshmukh Associatesis (2 Points)
Replied 24 March 2017

Hey, very nice site. I came across this on Google, and I am stoked that I did. I will definitely be coming back here more often. Wish I could add to the conversation and bring a bit more to the table, but am just taking in as much info as I can at the moment. Thanks for sharing.
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hemant (Asst Manager Accounts) (30 Points)
Replied 28 March 2017

Service Tax (under RMC for Prop.) Rs. 30,000.00

Descrive above point please

hemant (Asst Manager Accounts) (30 Points)
Replied 28 March 2017

is this 50% reverse charges ?

Sachin (Accountant) (30 Points)
Replied 29 March 2017

Hello Hemant,

As per query 50% reverse charges, i was giving jst an example for understand for work contract bill of raise & considereration. for more information please click on below given link and read carefully.

For further query

Please contact

Sachin

9990993323

https://www.simpletaxindia.net/2016/05/service-tax-reverse-charge-chart-wef-01.06.2016.H T M L#axzz4chGFgDRv