28 August 2012
Suppose an assessee (registered under VAT Act) is asking a contractor to construct, or to repair or to renovate a building. The service provider is called works contractor and the person who gives the order is service receiver. After completion of the work, the contractor will submit a bill collecting applicable VAT and service tax, when his turnover exceeds Rs.10, lacs in a year.
The service receiver will deduct TDS (income tax) and VAT TDS as per your state vat percentage. The service receiver also has to pay service tax on the 50% of bill value less applicable abatement.
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