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

Works contract tax applies to goods in construction, not to labour or transport, and contractor may collect and claim input credit.
Works contract tax under VAT applies to goods incorporated in the execution of the contract and does not extend to pure labour charges or to transportation, loading and unloading charges; a contractor who issues an invoice may collect and remit works contract tax and may claim credit for tax paid on materials used, so purchasers should clarify allocations and tax credits with the contractor.