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Query..kindly help!

SHRUTI AGARWAL (student) (108 Points)

13 July 2012

Please explain me the computation of VAT for UP and also the adjustment and calculation of WCT...

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5 Replies

CA Ashish Jain (chartered Accountants) (64 Points)
Replied 13 July 2012

dear shruti,

first you have to make it clear that ur client is availing composit scheme under vat..

if he is availing such scheme than vat credit can't be allowed.

and for the computation of WCT the total amount shall be taxed as rate prescribed.

if it is nt availing composit scheme than for the tax calculation the service element from the total amount is to be deducted......

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SHRUTI AGARWAL (student) (108 Points)
Replied 13 July 2012

Dear Ashish

i js want to know how to calculate the VAT liability if the have to pay WCT. the client is into the business of supplying material and insatallation of fire equipments

CA Ashish Jain (chartered Accountants) (64 Points)
Replied 13 July 2012

Dear Shruti,

pls refer follwoing article...

this is for Uttar Pradesh VAT Act, 2008

Where accounts maintained by the contractor do not show separately the value of labour and services and amount of profit accrued on such labour and services, or accounts maintained by the dealer are not worthy of credence or if the dealer has not maintained accounts, for the purpose of determining turnover of goods in which transfer of property in goods has taken place, in cases other than those mentioned in the table below, an amount, representing twenty percent of gross amount received or receivable, shall be deducted towards labour and services and amount of profit accrued thereon and in the cases described or mentioned in column 2 of the table given bellow, amount of deduction towards such labour and services and amount of profit accrued thereon shall be computed at the rate percentages, given in column 3 against the entry in column 2 of the table, of the amount received or receivable

Table

Sl. no.	Descriptttion of works contracts	Rate
1	2	3
1-	Fabrication and installation of plant and machinery	10%
2-	Fabrication and erection of structural works including fabrication, supply and erection of iron trusses,purline.	10%
3-	Fabrication and installation of cranes and hoists	10%
4-	Fabrication and installation of elevator(lifts) and escalators	10%
5-	Supply and installation of air conditioning equipment including deep freezers, cold storage plants, humidification plants and dehumidifier	10%
6-	Supply and installation of air conditioners and air coolers	10%
7-	Supply and fitting of electrical goods, Supply and installation of electrical equipment including transformers	10%
8-	Supply and fixing of furnitures and fixtures, partitions, including contracts of interior decorations	10%
9-	Construction of railway coaches and wagons on under carriages supplied by railways	10%
10-	Construction of bodies of motor vehicle and construction of trailers	10%
11-	Fabrication and installation of rolling shutters and collapsible gates	30%
12-	Civil works like construction of building, bridge, roads, dams, barrages, spillways and diversions, sewages and drainage system	30%
13-	Installation of doors, doors frames, windows, window frames and grills	30%
14-	Supply and fixing of tiles, slabs, stone and sheets	30%
15-	Sanitary fitting for plumbing, for drainage or sewerage system	30%
16-	Whitewashing, painting, and polishing	40%

gbalakrishnan (owner) (1373 Points)
Replied 20 September 2012

dear friends,

Truly VAT has three methods:

product based/consumer based/income based - in fact in india almost every dtate govt do not follow any single method so enormous consumption, so they do not say in specific terms what method so all the trouble.

adv. dr g balakrishnan phd LL.B

gbalakrishnan (owner) (1373 Points)
Replied 20 September 2012

in fact, the govt wants to get taxes on items taxes not paid by buyers. if the buyer buys from a seeler if he does not pay sales tax,or purchase tax, then liability revolves on the buyer, so buyer beware principle surfaced.

there are a lot of research reports from advanced countries are available as advanced countries just do not levy any taxes without the governments correctly knowing how to go about, as in USA there can not be any taxation without representation since 16th century and so it clearly means no body pays any tax just because govt wanted.

If govt's levy any levy they are answerable to the levied so the levied promptly moves the court. Govt gets stinkers from even normal courts, unlike India,

As CAs main responsibility is to first ensure to test why that levy at all and if that is okay why his/her need to pay and if that levy is on goods and services not properly taxed naturally buyer is liable for penalty and just compounding his fault by another levy.

In India we as CAs just ask clients to pay without rationale so we as CAs ae more known as just accountants though we are called 'Taxation Accountants' but by word 'Taxation accountants' it is very clear we need to establish the veracity of any tax before we allow the tax to be paid to govenment. That way we differ from CPAs.

so it is vital a CA is expected to correctly advice on taxation matter means he has to establish the veracity of tax first and if convinced of veracity then you will tell the client to pay, do we do like that!...adv dr G.Balakrishnan, rapidanalysts @ gmail.com