Works contract and tds under vat/cst

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2012 Facts:
1) There is a Contract between a unit of Ltd. Company and the contractor in Gujarat. The Ltd. Company is registered in Maharastra.
2) Cement and steel will be supplied by Company to Contractor. (within same state.)
3) The Contractor bills in stages after certified by Architect.
4) The Contractor is charging 4.12% Service Tax on full amount including Cement and steel supplied by Company.

The queries are:
1) What is the TDS to be deducted under VAT Gujarat Law.
2) Whether 4.12% Service tax rate is correct.
3) Whether Service tax on full is correct. (We can segregate the value between these materials and work).
4) In case service tax is payable then can we take credit of VAT paid on material purchased.
5) Also whether credit can be taken on Service Tax payable on this capital expenditure as per Service Tax Act as allowed in other capital assets in normal cases.
6) Is there any way by composition or otherwise where tax payable will be at lesser rate.
7) When is the TDS to be deducted and deposited.
8) In case TDs delayed what are the charges/penalty.

CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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20 August 2012 The contract is for completion of work.

So, if separate invoices are available for supply portion, then no need to deduct TDS on same, else TDS on whole amt will be payable.

CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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20 August 2012 TDS to be deducted at the time of expense booking or payment whichever is earlier.

For non deduction,1% and for non deposition 1.5% interest per month is payable. Part of month counted as full month.

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Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2012 Though Contractor is responsible only for other purchases and execution only Cement and steel is supplied by Company.
The Contractor issues bill and charges Service Tax @ 4.8% on amount including cement and steel supplied to contractor.

CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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21 August 2012 If you don't have seperate invoices, then deduct TDS on whole amt.