Wct-vat & service tax entry

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2013 Dear All,

In Case of Works Contract Service we have to pay both VAT & Service Tax,

For VAT if we are not able to separate Value of Material & Labour charges we go for standard deductgion option (e.g. in Maharashtra 25% standard deduction is available for labour)and on balance we have to pay VAT,

However,for service tax the chargeable value is 40% of total contract price as per service tax rules.Therefore we are paying tax on 115%(i.e.75%+40%).What is the solution for this and how to pass accountinf entries.

Please reply at the earliest.

Sumit Grover

Sumit Grover (Expert)
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19 March 2013 Let us assume the amount charged by Service Provider(Exclusive of VAT & Service Tax) is Rs. 100
Following entries shall be passed
From Service Provider's Point of view:
(Assuming VAT rate is 10% on 75% of the value)
Debtor A/c Dr. (100+7.5+4.944)

To Income A/c 100
To VAT Paybale 7.50(100X75%X10%)
To Service tax payable 4.944
(100X40%X12.36%)

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