applicability of VAT under APVAT ACT

[Guest]

sir,

                             In a works contract by name 'Improvements to the computer room'....which includes cement work,painting work,electrical work, and supply and installation of tube light fittings, fans, chairs,air conditioner etc.

                            In this connection, I would like to know the rule position relating to TDS under APVAT ACT. Whats is the correct procedure to deduct TDS.Whether to deduct 5 percent on total value of work done or to deduct 5 percent vat on civil work portion leaving the supply portion without TDS.

yours sincerely

Chakravarthy s.n.

[YAGAY andSUN]

Dear Sid,

In our opinion, you would have to deduct TDS on the gross value of Work Contract as it seems to us that  it is a indivisible works contract.

Also check the provisions of APVAT in this regard.

Regards

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

[venkata kondala rao manikonda]

Dear sir,

If you are in a position to split the work,  on Raw material you have to pay vat  and remain value you have  to pay TDS and service tax otherwise you have treat as lumpsum contract and pay vat at the rate of 5 percent and tds as per the applicable rates

AI Summary

Works contract treatment affects TDS and VAT allocation; split contracts allow VAT on supplies and TDS on service portion. The issue is whether a composite works contract for improvements, including supply-and-installation items, is an indivisible works contract-necessitating tax deduction at source on the gross contract value and lump-sum VAT treatment-or whether it can be split so that VAT applies to the supply/raw-material component and TDS applies to the remaining works/service portion, with service tax implications on services.