ST on works contract

[CA.Mohammed Lakkadsha]

If I am executing a WCT contract liable to taxed under MVAT @ 8% of Gross Value of works contract. Since the above contract is also taxable under WCT catgof ST , I opted for option A , which leads to Gross taxale value under ST at NIL. Whether above calc is correct.

AI Summary

Understanding Tax Implications: VAT and Service Tax on Works Contracts under Rule 2A and Composition Scheme Options An individual inquired about the tax implications on a works contract taxed under MVAT at 8% and whether opting for a certain scheme results in a nil service tax. Two responses clarified that even if VAT is paid on the gross value, service tax is still applicable if there is a service component. The first respondent explained that VAT payment does not convert the transaction entirely into a sale, and Rule 2A should be considered. The second respondent agreed, suggesting the composition scheme with a 4% service tax is more appropriate, aligning with the first respondent's view.