Works Contract Under Service Tax and Haryana VAT

[Vinay Sharma]

Dear Sir,

1-If a contract is treated as "Works contract" under service tax should it be treated as "Works contract" under Haryana VAT Act also.

2- In case of Works contract, In Haryana, the Contractee is required to deduct 4% TDS. Can the contractee, while deducting TDS may take the advantage of abatements provided under Rule 25 of Haryana Value Added Tax Rules 2003.

3- Practically most of the works contractors like Painters, Pest Controllers, Water proofing work, are not registered in Service Tax and/or HVAT. In such cases, while discharging own liabililty of Service Tax and VAT what precautions should be taken by the Contractee.

With Thanks and best regards

AI Summary

Works contract classification: treated as works contract for VAT with mandatory TDS deduction not reducible by abatement rules.
Under the Haryana VAT Act a contract treated as a works contract for service tax may also be a works contract for VAT. The contractee must deduct and remit the prescribed TDS on the total contract value, issue a TDS certificate, and cannot apply HVAT Rule 25 abatements when withholding. The contractee must separately deposit applicable service tax and file returns; any abatement claimed by the contractor and resulting refund or demand will be addressed through assessment and does not render the initial statutory deduction an unjust enrichment.