TaxTMI 
TaxTMI 
Does an contractor liable under VAT for the contract receipts for which already service tax paid? if yes at what rate, how to treat input tax?
How to arrive at VAT.
Contractor
24 Feb 2012 
1 Reply 
1319 Views Asked by
Works contract services: VAT liability may apply despite service tax payment, with specified TDS and material-cost exceptions.
Where a contract is classified as works contract services, VAT applies to contract receipts even if service tax has been paid; works contracts include agreements for building, construction and related activities. There is also a statutory provision for deduction at source from payments to contractors for works contracts, subject to exceptions based on prescribed payment and material-cost thresholds, and parties should clarify input tax credit and deductibility with counsel. (AI Summary)
Where a contract is classified as works contract services, VAT applies to contract receipts even if service tax has been paid; works contracts include agreements for building, construction and related activities. There is also a statutory provision for deduction at source from payments to contractors for works contracts, subject to exceptions based on prescribed payment and material-cost thresholds, and parties should clarify input tax credit and deductibility with counsel. (AI Summary)