03 November 2011
Mr Author, A works contract is a sale associated with some work(labour).Invoice is prepared on the approved quantity at agreed rates.But tax is charged on the total value minus the labour expenses(including profit on it).On the goods consumed in some states a common rate(in Karanataka 14%),whereas in many other states the rate applicable to the respective goods consumed in the contract are charged.The value of these goods is to be calculated by adding profit(GP)to the purchase price.Purchase of consumables and establishment expenses are to be added to the labour charges. MJK