Work contract

[CA.Mohammed Lakkadsha]

avaialable-setoff-and-payment-of-vat-for-a-work-contract--1080219.asp?utm_source=feedburner&utm_medium=email" target="_blank">Available setoff and payment of vat for a work contract ?

 

In Maharashtra, a contractor has taken a contract of pipe line from river to factory for 3crore.

During 10-11 only earth work was done, no property in any material is transferred. Expenses incur against earth work of Rs. 70 Lacs. WCT TDS was made on advances by employer of Rs. 2,00,000/-.

During 11-12, work done involves earth and labor work of Rs. 80 Lacks and goods of 10 lacks is used in contract, against which running bill of Rs. 1 crore is received with TDS under WTC at Rs. 2 lacks.
During 12-13 remaining work is completed, incurring expenses for Labor work of Rs. 30 lacs and for material Rs. 10 lacs .

Work is completed within three years.

Assessee has opted to pay VAT following rule 58. In first year there is no transfer of goods hence tax payable will be NIL and will have to claim refund, but in subsequent years material is used the property in which gets transfer.

Kindly advice how to discharge liability with calculation.
Whether completion method can be used ?

How to calculate tax in first year and subsequent years?

Thanks. 

AI Summary

VAT on works contract: deduct labour and allowable expenses under rule 58, pay VAT annually on goods transferred.
Under Rule 58 the contractor must deduct labour and allowable expenses-either via the prescribed table or by adducing documentary proof-from contract receipts each year and pay VAT on the remaining value representing goods transferred; tax is computed annually on amounts received and goods are allocated between tax rates according to the purchase ratio. WCT TDS on payments is separate from VAT liability.