Set-off on Works Contracts

This query is : Resolved

GOPAL KUMAR AGRAWAL (Querist)
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16 November 2010 A dealer is in the business of Construction of residential/ commercial properties. He undertakes contracts for construction of building on labour as well as with material. 80% of his turnover is through labour contract without material and 20% is with material.
For the construction work; shuttering material, scaffolding equipments, cranes etc. are purchased specifically for the projects which are used for contract on labour and as well as on contract with labour & material.

Query: Since the revenue as well as capital equipments are purchased by paying VAT, is the dealer eligible to claim set-off/ refund against labour contract sale as well as with material sale. If yes, please specify the rule under which the set-off can be claimed. If no, please specify how much percentage of the set-off ca be claimed against with material sale, which is 20% of the total turnover.

gautam kumar vaish

gautam kumar vaish (Expert)
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17 November 2010 its better if you don't claim vat paid on capital items, also you can opt for depreciation. like in uttar pradesh no claim of vat is eligible on capital goods in works contract case, in other business the rules are different under different state. in our company case also we don't claim input vat on capex.
replies can be discussed on gautamvncpl@yahoo.in