Please solve this problem
1st Step:: Assume one contractor purchase materials for supply and at the time of purchase paid OUTPUT VAT , after that he mark up certain percentage on that cost and supplied to the contractee, contractee will paid the amount to the contractor inclusive of VAT amount charged by the contractor.
2nd Step::Contractor will take INPUT VAT Credit at the time of purchase and after billed to the contractee, whatever OUTPUT VAT liability will arise, he adjust against his INPUT VAT CREDIT.
But if the contractor supplied materials and executed works simultaneously, irrespective of the percentage of material in total contract value & doesn’t raise separate invoice for supply and works executed, such contracts attract deduction of WCT @ 2% on the total value of the contract. Then how he adjusts this WCT liability against his input VAT CREDIT, if % of input vat is 4% or 12.5% and how he given treatment his WCT Liability against his input VAT Credit in his books.
Please confirm,
Bivas Nag
Mobile: 092304-22652
e-mail: bivas_kumar @ yahoo.com
CAclubindia
