Clarification - CST

[ashish kalra]

How can we take up interior works contract jobs outside delhi. We are registered in Delhi and pay 12.5 % VAT . Although CST is applicable, but we are not dealing in goods , but entire works contract. Some suggestions have guided us to open offices in gurgaon, noida and make it as branch offices. Is it viable. Its too expensive. We need to know how can we still take up work from say Noida, Gurgaon from our Delhi office only. We also wish to purchase both from Delhi & Gurgaon, Noida. We are stuck up. Pls. help.

[Surender Gupta]

Though you need to consult some expert on VAT but I am of the opinion that, on works contract, VAT is levied in the state in which contract is executed. However, in some states if TDS is being deducted by the contractee, you may not be liable to further VAT in such state. However, if you wish to make some tax planning in accordance with the provisions of related state, you may be required to open an office in that state and obtain VAT registration to comply with the formalities accordingly.

[ashish kalra]

Sir can we have some more opinions pls.

AI Summary

VAT on works contracts applies in the state of execution, requiring local registration or tax planning to ensure compliance. VAT on works contracts is levied in the state of execution, so a contractor registered in one state performing work in another will generally face VAT obligations in the state where the contract is executed. Some states may treat contractee tax deductions as affecting further VAT liability, but state-specific rules vary. To comply or pursue tax planning, contractors typically must obtain local VAT registration and fulfil that state's formalities; opening a branch is one way to regularise operations though it involves commercial costs.