Vat input credit

[chandrashekhar bathini]

Dear sir,

A company providing construction services in Telangana(construction of building ) and is paying wok contract tax @5% on 70% of the contract value

shall we take the input vat credit on purchases made(cement,steel,concrete mixer,consumable stores)against work contract tax.

[Ganeshan Kalyani]

Sir the credit is certainly not allowed. Department generally rejects the claim of input vat used in works contract service.

[YAGAY andSUN]

Dear Chandrashekhar,

Please check para 14 (i) of the appended link which enumerates that Any inputs used in construction or maintenance of any buildings including factory or office buildings, unless you are in the business of executing works contracts.

https://www.tgct.gov.in/tgportal/AllActs/APVAT/docs/Leaf/LEAF-1.pdf

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

Input VAT credit generally unavailable for building construction inputs, with an exception for works contract businesses. A Telangana construction-services supplier paying works contract tax is generally precluded from claiming input VAT credit on materials used in building construction; departmental practice rejects such claims. The cited para 14(i) excludes inputs used in construction or maintenance of buildings from input credit, but contains an exception for taxpayers who are in the business of executing works contracts.