Understanding Works Contract Services: Goods vs. Services Classification Impacts Tax Obligations, VAT and Service Tax Considerations.

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....Classification of services - Goods or service - No VAT may be payable on some goods under the state laws but that does not convert the Works Contract Service into a pure service contract. Conversely, if no service tax is payable on the service portion of some types of works contracts, they do not automatically become contracts for sale of goods. The nature of the contract has to be examined and if it involves supply or deemed supply of goods and rendering service, it will be a Works Contract Service regardless of whether or not VAT or Service tax is payable. - AT....