Direct cost

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Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2014 ABC Pvt. Ltd. is a construction company engaged in business of construction of roads and other government contracts. I want to know whether cost of diesel and oil and repairs, in vehicles engaged in making road and shifting of goods from various sites and plant, would be direct cost or indirect cost??? Since it is a construction company vehicles and machines required for constructing road and shifting material to various sites from plant requires higher use of vehicles. so cost of diesel, oils and other repairs is very high as compared to other industry. please tell me these cost would be direct or indirect??? thanks

Rupesh Jain

Rupesh Jain (Expert)
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23 April 2014 oil diesel, veh. repair and maintenance are direct cost for your business.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2014 Thank you for your response...could you please justify your answer?

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V Uday Kiran

V Uday Kiran (Expert)
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24 April 2014 hi there ,

I agree with rupesh... I ll justify ... in common parlance Direct costs are those which are directly related to production ... indirect costs on the other hand are those that are not directly relatable to the cost object like admin costs etc.., in this case if there are no vehicles your entire project would come to a standstill ... hence the vehicles are very important for your end product and hence a direct cost for your company ....

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2014 Thanks for your response...i agree with your point...do u mean to say even vehicle repairs and maintenance cost are direct cost in my case???? i doubt that the department will allow me to claim this expense as direct cost and allow VAT credit on these expense. could u backup your answer with some statutory provisions or case laws????