Works contract tax

This query is : Resolved

Guest

Guest (Querist)

08 August 2011 My Client is under tender contract with government, where government pay contract receipts on the basis of work completed.while the receipt recorded P&L is gross (ie of contract receipts + tds deducted by the government on contract + work contract tax deducted)......work contract tax is also debited to P/L

on the other had company pay VAT on the material bought that is used in contract & where purchases are recorded net of VAT & VAT component is separately recorded in P&L & later claim refund in vat Refund

my question is can this refund be adjusted against work contract tax??

Tushar Desai

Tushar Desai (Expert)
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10 August 2011 No. VAT & WCT are only administered by a common body. But, they are different taxes, and cannot be adjusted against each other. Hence, your VAT Refund is a separate process, & WCT is a separate one.

Guest

Guest (Querist)

10 August 2011 that mean my vat refund should stand as receivables in balance sheet & WCT is just a disclosure in vat refund?

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Tushar Desai

Tushar Desai (Expert)
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11 August 2011 As I told you, pls don't mix WCT with VAT. Those two are different things.
and yes, you can show VAT Refund as receivables. keep separate G/L acc for WCT.