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Work Contract Tax

Jagan (B.Com) (35 Points)

10 May 2007

Sir,

One of my clients is a Real Estate Developer. They either purchase land or get into a JV with landowner and build commercial / residential complexes. They award the contract for construction of the said complex to a main contractor. (Here, cement and steel may be supplied by us). in that case, whar is the wct applicable to be paid to the contractor?

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105 Replies

M Janak Rao (TAX CONSULTANT) (93 Points)
Replied 22 May 2007

?what is the limition of Composition scheme in Assam against work contract tax. ? What is the benfit of Composition scheme of WCT ? Why govt is issue road permit against composition Scheme under work contract ? as per our calcullation Govt. Loss 8% Revenue in machinery purchase as per work contract

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(Guest)

Ok Thank you for message

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 14 November 2007

I would like to reply your querries as under:- 01. There is no limit of turnover for composition for works contractors under AVAT Act. 02. By opting the composition scheme one get relief from tidious calculation of ITC and from keeping of lengthy records. No tax invoices are required, hence one can purchases even from other dealers under composite schemes. 03.I can not understand your third question, that why govt. is issuing road permit to such dealers. Do you want to say that state Govt. have power to restrit inter state trade & commerce? 04. I do not agree that, by issuing road permits state government is loosing any revenue.

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 14 November 2007

(Guest)

what is meant by work contract, how much % will be deducted in the value. how many type of work contract

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(Guest)

Is WCT is applicable on sub contractor

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 22 December 2007

It is an established law that for the excution of one contrcat taxes can not be imposed eparately on Contractor and Sub Contrcator. If the sub-contractor is paying WCT/VAT on his turnover then the main contrcator will get relief on his related turnover. If main contractor s paying tax on his entire wc, sub contractor will not be liable for WCT/VAT. However, there may some prescribed rules and procedure for establishing the fact.

(Guest)

Whether Work Contract Contract in Assam. Whether we are liable to deduct work contract tax while paying to vendor.

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 29 January 2008

As per Assam Value Added tax Act, 2003, section 47, TDS is to be deducted only by:- "Every person other than an individual, a HUF, a firm or a Company not under the control of the Govenmen".

(Guest)

I HAVE A CIVIL CONTRACTING COMPANY. MY CLLIENT SUPPLIES THE CEMENT AND STEEL REQUIRED FOR THE CONTRACTING WORKS WHEREAS I PURCHASE THE LABOUR, THE RIVER SAND AND THE GRITS REQUIRED FOR CONCRETING; THE MACHINERY REQUIRED FOR THE SAME; THE STEEL SHUTTERING PLATES AND OTHER MATERIALS. THE CLIENT IS NOW DEDUCTING 3% WCT FROM MY BILL ALONG WITH 2.266% INCOME TAX. I CAN UNDERSTAND THE TDS ON THE INCOME TAX; BUT SINCE I AM NOT PROCURING THE CEMENT AND STEEL HOW IS THE WCT APPLICABLE TO ME AS I WILL NOT BE ABLE TO CLAIM ANY SET-OFF AGAINST THE TAXPAID ON PROCURING THESE ITEMS. MY QUOTED RATES INCLUDE THE COST OF CEMENT AND STEEL AT A FIXED RATE SUPPLIED BY MY CLIENT. WHAT PROCEDURE SHOULD I ADOPT TO CLAIM THE 3% BACK OR IS THERE ANY OTHER METHOD.

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Raman Popli (Chartered Accountant) (52 Points)
Replied 06 March 2008

In my views still you are in the ambit of WCT, as you provide the labour as well as the River Sand and the Grit required for concreting. Moreover, the TDS rate for WCT is different from state to state, pl. ensure correct TDS is being deducted.