Work Contract Tax

[p.k.s nair]

Sir,                                            

I have entered into an agreement with a Civil Contractor ( a Privite Limited Company) to Construct a house in our village. The estimated value is Rs. 39,33,692.22. The  contractor levies Rs. 1,19,191.00 (3.03%) as Tax on the estimated value of the house. Sales Tax are levied while purchasing by the dealers and included in the cost of goods/materials viz. a viz.- Cement, Iron and  Steel, wooden compontents like doors and windows, Tiles, glasses, electrical and plumbing accessories for use in the construction of house. So again Tax is payable by me or not and if so how much?. And whether the contract tax in payable on labour charges for construction of house and Transportation charges which includes loading and unloading charges levied by the loaders.

Please help me and clarify.

Regards,

P.K.Surendranathan Nair.

5-9-2012.

AI Summary

Clarification on Work Contract Tax: Not Applicable on Labor or Construction Services, Only on Goods in Contract. A user inquired about the applicability of work contract tax on a house construction agreement with a civil contractor, where the contractor charged a 3.03% tax on the estimated project value. The user sought clarification on whether additional tax is payable on materials and services like labor and transportation. A respondent clarified that work contract tax under VAT is not applicable to labor or construction charges, including loading and unloading. It is levied on goods involved in the contract. The contractor should issue an invoice reflecting this tax, which will be deposited with the relevant department, and may benefit from tax paid on materials during assessment.