WCT Vs WCS

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lakshmi (Querist)
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06 April 2009 Is both Work Contract Tax (A compounding scheme under State levy) and Works Contrct Services (under Service tax) is applicable on a contract. Service provider claims that when he pays WCT he need not pay Service tax. Is that correct.

SIDDHARTHA SANKAR ROY

SIDDHARTHA SANKAR ROY (Expert)
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06 April 2009 Works contract a composite contract for supply of goods and serviecs .VAT/Sales tax is leviable on transfer of property in goods involved in the execution of works contract and service tax is leviable on services provided in relation to the execution of works contract.

CMA KNVV Sri Vidya - Sri Kanth

CMA KNVV Sri Vidya - Sri Kanth (Expert)
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07 April 2009 thanks roy ji

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CMA KNVV Sri Vidya - Sri Kanth

CMA KNVV Sri Vidya - Sri Kanth (Expert)
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07 April 2009 thanks roy ji

lakshmi

lakshmi (Querist)
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07 April 2009 If the contract value is Rs.1 lakh and WCT has been paid at 4% on the above 1 lakh ie.,Rs.4000. There is no separate invoice raised for supply of goods. How much service tax is payable and at what rate.

Pravin Nemad-CWA

Pravin Nemad-CWA (Expert)
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07 April 2009 For services tax, there are two option available to the Contractor,1) he can directly paid 4.12% service tax on contract value i.e on 1 lakh rupees or else 2)he has optin to deduct 67% directly from 1 lakh rupees & on balance amount he can pay service tax at normal rate i.e 10.30%.
But in first method he can not claim service tax credit received on services hire in realtion to execution of said contract. In second method he is eligable to avail the credit of service hired.

If any body who enter in to Work contract after 24.02.09, then it is advisable to him to opt second method of service tax, because net tax burden is lower due to lower in reguler service tax rate from 24.02.09.