Works contract tax in tamilnadu

[Ravikumar muthusamy]

Dear Experts

Our registered building contractor filed vat return I on deemed sales value. he is getting periodical payments on  construction of a commercial building like 2 lakhs per month. In his bill he is collecting service tax at the rate of 12.36 percent on 40 percent on the bill value considering 60 percent abatements. The question is what is the vat or wct tax to be collected in his bill and what percentage.

[MANDAVILLI RAMAKRISHNA]

in ap the system is to pay tax on composition system ie., 1 per cent of the registered document value. 

in case of construction activity without involving land, the contractor has to pay on abatement basis 5 per cent and on input claiming method at 14.5 percent on total billl value minus 90 percent of the input value.

 

AI Summary

Works contract tax: composition and abatement options determine contractor's VAT liability, including composition, abatement and input-credit routes.
Two taxable computation routes are available: a composition scheme charging tax on the registered document value; and, for construction without land, either an abatement basis reducing taxable contract value or an input-claiming method applying a gross rate to total bills reduced by a proportion of eligible inputs.