works contract tax

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Prity (Querist)
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23 January 2009 Please explain me the relation of works contract tax levied under service tax and state value added tax. elaborate the situation where either of one or both of the legislature levy works contract tax?

CA Amarpal

CA Amarpal (Expert)
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24 January 2009 Dear Prity.

As per the given facts,
Both service tax and VAT shall be levied on works contract.

(i) The CG has issued "Works Contract( Composition scheme for payment of service tax ) Rules, 2007, under which service tax @4% shall be paid on gross amount. However no CENVAT credit of duties or cess paid on inputs used in relation to said works contract, shall not be taken.

(2) The levy of VAT shall be governed by the VAT Act of respective state.

With best wishes
amarpal@icai.org