Rate of VAT applicable on a work contract of civil as well as fixing of furniture with material,

[d.v. gupta]

dear all, we have undertaken a work contract of civil as well as fixing of furniture with material. we have used goods of 4% vat as well as 12.5% vat. as per works contract act we have to apply vat on 75% of contract value. let me know the rate of vat applied on 75% contract value in view that we are using 4% as well as 12.5% items in execution of work. in my opinion it should be taxed at 12.5%. kindly discuss if othe rate apply.

[Surender Gupta]

If you are transferring the declared goods (4% goods) in the same form as you have purchased, the rate of VAT shall be 4% only. Otherwise, the rate of VAT on execution of works contract is 12.5%

AI Summary

Works contract VAT: declared goods retained in same form taxed at lower rate; otherwise higher contract rate applies. VAT for a works contract is levied on 75% of the contract value. Declared goods supplied in the identical form to the purchaser retain their original lower VAT rate; goods not transferred in the same form, including those incorporated into the works, are subject to the higher works-contract VAT rate on the taxable portion.