03 August 2025
Here’s a clarified overview of Works Contract Tax (WCT) rates applicable in Madhya Pradesh (MP) and Uttar Pradesh (UP) under the pre‑GST (VAT) regime: 🇲🇵 Madhya Pradesh – WCT under VAT (Pre-GST) According to the Madhya Pradesh VAT Rules, 2006, works contract taxation under composition option was allowed, with specified rates: Civil construction contracts (buildings, roads, bridges, dams, canals): 2% of contract value Supply & installation of air-conditioners, lifts, weighbridges, etc.: 10% Other types of works contracts not specified above: 4% reddit.com +6 caclubindia.com +6 taxguru.in +6 These composition rates meant no input VAT credit was available (except partial credit provisions in Maharashtra), and tax was computed on the entire contract value. 🇺🇸 Uttar Pradesh – WCT under VAT (Pre-GST) UP VAT Act and Rules define works contract similarly but there is no comprehensive public source specifying fixed WCT rates like MP’s Rule 8A. However, similar to other states, rates commonly ranged between 2%–5%, with many applying on labor-only portion after deduction of material cost. In practice: If contract values were segregable, VAT on sale of goods and service tax on the service portion were computed separately. Actual rulings often depended on calculation method adopted by contractee and state specifics. new.capradeepjain.com caclubindia.com 🚨 State Variance Summary State Typical WCT Rate(s) Features Madhya Pradesh 2% (civil), 4%, 10% Fixed composition under Rule 8A (VAT Rules 2006) Uttar Pradesh Around 2–5% typical Varies by contract type, often based on labor portion only ✅ Key Takeaways: Rates vary significantly by state—MP has clear structure; UP rates are more flexible or not uniform. WCT may apply on gross contract value or selectively on labor component, depending on state law and contract structure. Under GST regime, WCT was replaced by GST on works contract services, typically at 18%, with concessional 12% rate for certain government contracts until increase to 18% effective 1 Jan 2022 caclubindia.com +3 taxlok.com +3 taxguru.in +3 .
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