We are the contractors and registered under societies act and handling only government projects around 35 crores annual turnover and at present we are in COT. Now we are planning to convert cot into vat. so please guide us which most appropriate and safe in terms of taxation.
25 June 2013
Mr Vijay Viswanath, It is always better and benificial to go by the VAT system. The rate of tax under COT method is higher than VAT. For ex in Karnataka under COT tax rate is 4%,whereas under,after availing input and other deductions as per rules it works out to less than 3% on the turnover.COT is suitable only for small contractors who do not have proper accounting staff/system.But,large scale works,as such need good accounting and compliance with all rules. Here even 1% addition of tax will result in huge payments.Interstate purchases/sales can be done easily,against 'C' form under VAT, which becomes necessary for large works. Under VAT billing is to be done carefully,but under COT it is simple..etc.....mjk
CAclubindia
