Work Contract Tax

[Ranjana Trivedi]

My company worked as a Contractor and Vat & service tax both are applicable but my question is that what is the percentage of WCT. there are two options - 1. 67% of job Value vat is 12.5% and 33 % of job value service tax applicable 2. 80% of job value Vat is 12.5% and 20% of job value is service tax applicable. My question is what is better option which can apply and follow rules. My company deals with fabrication, erection and making of steel structures. please suggest me what I do?

[YAGAY andSUN]

Dear Ranjan,

First of all, please check the classification of the taxable output services

Secondly, Do check all the possible exemptions/abatements you can avail i.e. whether actual deduction, abatement or composition scheme, which one is more beneficial to you.  In my opinion you should opt for composition scheme for both Works Contract Tax under Service Tax and under VAT. 

But before opting for any scheme, just do your homework and cost benefit analysis.

 

Regards,

 

Pradeep Khatri

[Rahul Sharma]

As per rules; STCC IS LEVIED @ 12.36% on 33%; So in that case12.5% VAT on 80% & 12.36% on 33% both has to be levied. Actually VAT goes to State department & 20% in abatement & STCC is central Tax. 

I have been practising same from last one year; the only issue is Tally doesnot support this format. 

CAN ANYONE VALIDATE THIS!!

Thx,

Rahul

AI Summary

Works contract tax allocation: verify classification and choose VAT/service tax apportionment with suitable composition scheme. The dispute concerns apportioning contract value between VAT and service tax for steel fabrication and erection contracts, with two proposed splits. Advisers recommend verifying classification of output services, exploring exemptions, abatements and composition schemes, and running a cost-benefit analysis before electing a scheme. One advisor suggests composition schemes for both VAT and service tax; another describes a practical approach where VAT is charged on the larger apportioned value and service tax (plus applicable cess) on the service portion, noting accounting-implementation issues.