WCT on labor charges

[Asked by Guest]

Dear Sir,

We have awarded labor charges contract to party for machanical work (I.e Erection, Febrication , Instalation )

Contract Value :- 25 Cr.

Please suggest me can i be deduct WCT ??

Thanks & Regards,

Sanjay Vasava

[DR.MARIAPPAN GOVINDARAJAN]

Any material supply is involved in this contract or it is a pure labour contract?

[Ganeshan Kalyani]

In my view, fabrication, erection and installation by default includes material portion. Even if the main asset is supplied by vendor, the service provider of fabrication, erection and installation need to incidentally add some material to carry out the aforesaid activity. Hence in my view, works contract tax need to be deducted.

As the works contract tax paid by the contractee is a credit to the contractor, it is better to pay,

AI Summary

Works contract tax applies where fabrication, erection and installation include material components, so deduction is required.
If erection, fabrication or installation involves any material component-whether supplied by the contractor or incidentally used-those activities are treated as works contract and attract works contract tax, so the contractee should deduct and remit WCT; WCT paid by the contractee is a tax credit for the contractor.