TAXABILITY

[LAXMIKANT ARORA]

Whether  textile processing such as tailoring, dying. fabrication, embroidery and other similar activities are works contract or not ?

AI Summary

Textile Processing Taxation: Works Contract or Not? VAT on Total, Service Tax on 67%. Dyeing Exempt, Embroidery Taxable. A forum participant inquired about the tax implications of textile processing activities, questioning whether they qualify as works contracts. One response clarified that works contractors should not charge 4% VAT on 33% of the invoice value, but rather on the total value, while service tax applies to 67% of the value. Another response noted that tailoring does not involve property transfer and is not a works contract, while dyeing and embroidery may be taxable depending on property transfer. Dyeing is exempt as intermediary processing, and embroidery may be taxable due to thread transfer.