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

Contractor Queries VAT Rates for Building Projects; Explores Composition and Abatement Tax Options Under Section 5 A building contractor in Tamil Nadu is filing VAT returns based on deemed sales value and receives monthly payments for constructing a commercial building. The contractor applies a service tax of 12.36% on 40% of the bill, considering a 60% abatement. The query seeks guidance on the applicable VAT or works contract tax (WCT) rates. The response explains that in Andhra Pradesh, contractors pay tax on a composition basis at 1% of the registered document value. For construction activities without land, a 5% tax on an abatement basis or 14.5% on the total bill minus 90% of the input value is applicable.