Subcontractor

This query is : Resolved

divya barola (Querist)
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16 May 2013 ABC Ltd appoints A ltd. as the contractor for construction of building (8% vat).
A ltd. Subcontracts it further to B Ltd. who doesn't charge vat to A Ltd. since vat can be collected either by contractor or by subcontractor but not by both.B Ltd. pays vat on its purchases.
Since B ltd does not charge vat to A ltd, what will happen to the vat paid by B Ltd. can its setoff be claimed by A Ltd?
Also, if A Ltd takes service from another party (3rd party other than B Ltd.) can it claim the set off of the vat paid?

Prakash Kochar

Prakash Kochar (Expert)
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17 May 2013 In Maharashtra VAT on construction contact is 5% under composition method. Other than notified construction contracts attracts 8% tax under Composition.
B Co. will be entitle for setoff (restricted as per rule)of vat paid on purchases, used in contract, though liability of payment of tax on sale will be discharged by A Ltd.