28 November 2011
Mr. PK Mishra, VAT is applicable on the value of transfer of property and Service tax is applicable on the value of labour and other services. Rate of VAT is 4% on the value of declared goods and 12,5% on the value of other goods involved in the works contract. Service tax is 10% and cess. MJK.
29 November 2011
Mr. PK Mishra, There are some goods mentioned in Sec 14 of CST Act 1956 such as :Cereals,pulses, cotton,cottonyarn,cotton,manmade and woollen fabrics,oil seeds,iron and steel,jute,sugar,LPG,crude petroleum,hides and skins.These goods are chargeable @4% and the remaining goods used in works contract are chargeable @12.5%. The total contract value can be segregated into labour and matrial easily.Suppose your total contract value is Rs10 lakhs. You buy 5.5laks worth of material such as cemnt,sand jelly,bricks,wood etc,labour expenses is Rs2.5lakhs,services like transport,electricity,water etc for Rs1 lakh and GP Rs1.0lakhs.Now distribute the gross profit to thease items of expenses on % baasis like Rs55,000/-for material,25,000 for labour,Rs10,000 for others.Your total value of srvices and labour comes to(Rs2.5laks+Rs1.0laks+Rs25,000+Rs10,000)=Rs3.85lakhs.on this it 10.25%.It is slightly less than 4.25%on the whole amount of contract.In the same waay the total value of material supply becomes Rs6.05lakhs.Out of this on the value of steel supply it 4% and on the rest12.5% MJK
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