Works Contract Tax

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harish (Querist)
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18 March 2009 Dear Sir's

Can anybody give me information regarding Works Contract Tax & to whom it is applicable & what is the Tax Rate ?

Thanks
Harish

Tushar Yerawar

Tushar Yerawar (Expert)
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18 March 2009 This is as per Maharashtra Value Added Tax

Typically, works contract is a composite contract that envisages both the supply of goods and provision of services ie it is a transaction of transfer of property in goods involved in execution of works alongwith supply of labour/ services for such execution. Under the provisions of MVAT Act, works contract would include an agreement for building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property.

Some examples of such contracts would be civil works like construction of buildings; installation of plant and machinery, air conditioners, elevators, etc; fixing of marble slabs, tiles, etc; annual maintenance contracts.

The MVAT Act provides for deduction of a specified percentage as WCT TDS while making payments to contractors to whom works contracts are awarded. Such deduction is required to be made if the awarder of the contract qualifies as ‘employer’ as notified.
It may be noted that this list of ‘employer’ includes a company registered under the Companies Act, 1956. WCT TDS provisions under MVAT ACT are applicable to local transactions within Maharahstra.

The rate of WCT TDS has been currently prescribed at 2 percent in case the contractor is a registered dealer under the MVAT Act and 4 percent in case contractor is not registered under the provisions of the MVAT Act.