Work contract bill

This query is : Resolved

T Santosh (Querist)
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15 November 2014 Good afternoon all, sir, i am working in construction company. I got a work contract bill, where they charged 85% Vat and 15% Service tax. Can i take both input credit? How can i deduct tds?

Neljo Davis ACA

Neljo Davis ACA (Expert)
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18 November 2014 Please note the following in the above situation.
Assuming that the construction company is main contractor and the works contract bill is from a subcontractor.
1. The company can deduct the sub contract amount from the main contract while computing VAT liability (Kerala VAT).
2. Provisions of TDS u/s.10 of the KVAT Act will be applicable.
3. Input on Service portion of execution of Works contact can be claimed only if the construction company is in the same line of business.i.e. Raising Works Contract Bill.
4. TDS u/s 194C of the Income Tax Act @1% or 2% depending upon the status of the sub contractor. i.e Individual/HUF or Others (on Total bill amount less Service Tax)
5. Reverse charge mechanism under service tax will also apply if the sub contactor is other than company.