worth contract tax

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Arpit Gupta

Chartered Accountant

95 Points Joined December 2008

DO YOU KNOW what is WORTH CONTRACT TAX ????????????

Replies (2)

TR Nagaraja

Consultant

209 Points Joined November 2008

Compositon tax. Works contrat means different types of work done. The worth of work contracts is payment of tax to govt. IF We are works contract we have to pay compoisiton tax @ 4%. If we are not under works contract we have to pay different rate of tax depends on our sales and purchases. Lum sum paymnet of tax is worth instead of paymnet of difference tax and maintaince of books of accounts

RAJU

LEARNER

1089 Points Joined November 2008

· Works Contract tax is a indirect tax and it is part of VAT.

· VAT is payable on sale of goods.

· There is a concept called `deemed sale` in VAT wherein transfer of property does not take place in one go. Sale of computer is a sale wherein the property in goods is transferred to the buyer as sale of computer as a whole. However, in cases like construction of bridges etc., property in goods like cement, bricks and other construction materials are transferred by the contractor to contractee over a period of time till completion of construction. This is called deemed sale and accordingly taxed as Works Contract tax.

Hope you have been clarified.

Rgds/Dharmaraju