Service tax on contract of construction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2015 Dear Expert,
one of my client got contract of construction labour and materials wil be used of my client.contract amount rs 500000/- whether vat will be levied or not if yes what will be vat & service tax amount.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

28 January 2015 Works contract Vat will be payable at 5%(Check the applicable rate in your state) service tax 12.36% payable on 40% of contract value(provided you are in service tax net).

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2015 Dear sir
as you have mentioned service tax 12.36% payable on 40% does that means vat 5% payable on 60% am i correct.

Upgrade to CAclubindia Pro. Subscribe Now!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

28 January 2015 No, vat is payable on 100% value that is why the rate is low at 5%.

@*CS Siddharth Bumb. *

@*CS Siddharth Bumb. * (Expert)
Follow

29 January 2015 Agree with Seetharaman ji ,

Your case is covered under works contract. VAT shall be 5% on total amount (check the rate as per your State act) and also refer whether such person covered under composition scheme for credit purpose.

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2015 Dear sir
i have checked the vat applicability as per my state is 5% on contract. as you have said vat payable 100% contract amount. as per myself calculation is below...

contract amount 500000/-
vat 5% 25000/-
Service tax 12.36% 61800

Total amount 586800/-

Plz... check it out.. is this correct..

CMA Shubhajit Karmakar

CMA Shubhajit Karmakar (Expert)
Follow

31 January 2015
VAT to be calculated on material portion of contract. process of calculation of VAT on contractual price varies state to state.Most of state allow deduction extent to labour portion. Alternatively you may go for composite scheme at lower tax rate. 5% flat tax should not be applicable.