04 December 2014
My client has entered into aggrement with vendor including Service as well as supply of goods. The vendor , in his invoice charges VAT @ 5% on 75% of the total bill amount and Service tax @ 12.36% on 70% of the bill amount.
For Eg: Bill Amount : Rs 1000/- VAT Amt : 37.5 (1000*75%*5%) Service Tax : 86.52 (1000*70%*12.36%)
Is such levy of tax justified? is TDS and WCT both required to be deducted @2%?? Can TDS and WCT both be deducted at the same time on one invoice? Please ans asap
05 December 2014
The levy is justifiable. VAT and Service Tax levy is governed by different statutes. In the cases were material and labour portion is not separately identifiable, VAT Laws assumes 75% as material portion and Service Tax Laws assumes 70% as service portion. Both TDS and WCT can be deducted from same invoice. WCT rate will depend upon the VAT law of each state.
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