Incentive or Bonus whether taxable under VAT

This query is : Resolved

Taxguy (Querist)
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25 April 2008 My client has received an incentive for early completion of project under the works contract. The Incentive was announced in the contract when it was entered and now it has been determined. Whether there will VAT on this amount received. Accoring to me it should not be brought to tax under VAT. It is neither a sale of goods nor a service under service tax. It is laible only for income tax.
Is my understanding correct.

CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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25 April 2008 if you client is complete the work in time then he got incentive from his client then it is treated as income and liable to income tax only