Manvi Mehrotra (Associate Tax Consultant) (88 Points)
06 December 2012
Friends
My Question is:-
If i am a contractor providing contractee with a bill of Rs. 100000 on which the amt of materials and labour is indivisible, what will be the WCT considering all the aspects will be deducted and by whom?
its highly urgent.
Plz reply.
Yogesh Bhandari
(CA FINAL Student)
(429 Points)
Replied 06 December 2012
There are Two situations:-
1) Normal Scheme - dealer estimates what component constituents goods and labour e.g., 80% and 20% or 75% material and 25% labour & accordingly tax the goods in categories declared goods , other goods.
2) Composition Scheme - As per DVAT rules, if the dealer made purchases and sales within delhi then, Works Contract tax @ 2% and in other cases 3%. In this situation, the payer will be liable to deduct tax at the rates above to secure the Tax Payment.
Manvi Mehrotra
(Associate Tax Consultant)
(88 Points)
Replied 06 December 2012
hey thanx a lot.
so u mean that if the customer presumes that in the amount of Rs.100000 , 70% is material and 30% is labour.
I will draw my bill like
VAT = 70000 * 12.5%
Service tax = 30000 * 12.36%
is it corrcet?
Yogesh Bhandari
(CA FINAL Student)
(429 Points)
Replied 06 December 2012
Not the customer presumes, its the contractor who presumes in calculable/scientific manner because he knows what the title transferred.
First of all, you have to clarify your case that from whom prespective you want ask query and other terms?
Manvi Mehrotra
(Associate Tax Consultant)
(88 Points)
Replied 06 December 2012
hmm..
i want to ask from the point of view of the contractor who wl raise the bill.
If he calculates that he has spent Rs.70000 on materials and the rest Rs.30000 on labour.
on what amount wll he charge what tax.
plz make the calculation as will indicate in the bill provided by the contractor.
think urself as the contractor
Yogesh Bhandari
(CA FINAL Student)
(429 Points)
Replied 06 December 2012
First of all, if the material and labour Charges are separable in some scientific manner, then that % will applied in all cases (Normally those co. applied which follows costing standards)
But, the contractors normally follows the specified % given by the state tax laws for the separation of labour & material such as in rule 3 of DVAT rules specified % given for labour and other charges is 20% on total contract value.
If you follow, DVAT rules, then bifurcation will be Rs. 80000 on materials and the rest Rs. 20000 on labour and Vat @ apllicable % on goods on Rs. 80000/- and ST @ 12.36%.
However, if you follow abatements given in Service Tax, then circumstances will be changed i.e., ST charged on total contract value @ 4.8% plus Cess 3% on ST.
Manvi Mehrotra
(Associate Tax Consultant)
(88 Points)
Replied 06 December 2012
so if we follow abatement given in service tax, and pay service tax at the rate of 4.8%, is that the only liability arising on us?
What about WCT and on what amount will it be charged/?
Yogesh Bhandari
(CA FINAL Student)
(429 Points)
Replied 06 December 2012
VAT liability and ST both incurred in every case in different ways. They are two taxes under different laws. WCT is deducted by the Customer for which you get the benefit under Sales Tax.
Manvi Mehrotra
(Associate Tax Consultant)
(88 Points)
Replied 06 December 2012
thank you so muchh...:)
things are clear to me now.
thanx.
CAclubindia
