Shifting of Commercial Construction Contractors under Works Contract

[rajesh marwaha]

The existing Commercial Construction Contractors,other civil contractors are presently convred under Commercial construction. Thay pay VAT also on their turnover as the same is Taxable under VAT / Sales Tax LAw of the State. Can we shift all them under Works Contract and pay Service TAx @ 2.06% on their turnover or on the turnover after deducting the amount chargeable under VAT (Which shall be practically NIL as they have already been paying VAT on whole Turnover under VAT composition Scheme).

AI Summary

Works contract service taxation: contractors may opt into works contract regime with differing tax bases and credit eligibility.
Contractors can opt into the works contract service regime by registering for the relevant taxable service and pay service tax either on net service revenue (gross contract value less goods transferred) with full Cenvat credit of inputs, input services and capital goods, or on a presumptive gross basis with credit limited to input services and capital goods; VAT paid on the contract value should be deducted where applicable, and past-period protection exists under prior judicial rulings though legislative change affects future levy.