Dear all,
An engineering metal plating company, does work on contract basis here in bangalore. They, are charging (Vat) of 5.5% on their sales. what they do are :
1) get the material from the customers
2) process the same and purchase materials required for processing it with vat/cst
3) sale it to customers with vat of 5.5%
4) adjust the vat collected with the vat on purchases.
example: they recieve a contract of Rs. 100 and they process it and give it to customers by charging 5.5% of vat on Rs.100. for processing it they might have purchased some material with 12.5% or 4%. In the month they adjust the input vat and out vat and pay / refund the rest amout.
points to be noted:
- they dont mention service/ labour charges separately
- they mention the materials and they put the tax of 5.5% on total bill
Is this transaction correct or they have to choose composite scheme where they will not get credit on purchases ? plz help me...
thanks in advance.
CAclubindia
