Concept of Interstate Works Contract

[Srivatsan Krishnamachari]

Dear Experts

Kindly clarify me below points related to Interstate works contract.

we have mfg unit Telangana and we received works contract to be executed at Bihar. We are purchasing all the material required for executing this works contract at Telangana and sending the same to Bihar except some items. In taxation point of view, How much % of sales tax or CST i need to pay and how much Excise amount i need to pay.and Service Tax amount. Is there any exemption notifications related to Excise & Service tax.

Thanking you in advance.

Regards

Srinivas

[KASTURI SETHI]

Dear Sir,

If you want to know about exemption for Central Excise and Service Tax, you will have to elaborate your query. What is the nature of project ? With whom you have executed contract ? Further, more details will enable the experts to file concrete reply.

[DR.MARIAPPAN GOVINDARAJAN]

Yes, I also agree with the views of Shri Sethi. While giving a query full details are to be given otherwise it will be futile.

[Ganeshan Kalyani]

Sir i too agree with Sri Kasturi Sir's reply. Sir, if you are a manufacturer and proposing to carry out a project at Bihar then you should do purchase locally. This will entitle for VAT credit subject to exclusion clause.

Further you are requested to provide more details to enable us to advocate you. Thanks.

AI Summary

Interstate works contract: tax treatment depends on contract nature; local procurement may protect VAT credit and affect indirect taxes. Interstate works contract raises allocation of indirect tax liabilities-CST/VAT, excise and service tax-when materials bought in the manufacturer's state are sent to the work site in another state. Tax consequences depend on the nature of the project and contract specifics; local procurement at the site may preserve VAT credit subject to exclusions. Further factual details are required to determine excise and service tax exemption eligibility and exact CST/VAT treatment.