Which Taxes are Applicable for Work Contract, VAT + CST

[Sumt Patel]

We are a Contractors & Fabricators of Aluminium & Steel - Windows/ Doors/ Partitions/ Ceiling/ Structural Glazing/ Cladding work etc.

We purchase a material (i.e.: Aluminium/ Glass/ Plywood/ Hardware, etc.) from market & Also taking a service of Powder Coating / Anodizing on Aluminium of Steel form outside service providers & then we can fabricates all of above & do a installation (fixing) on site.

So while preparing an Inoice Which Taxes are Applicable & How many Percentges.

VAT/ CST/ ST/ WC VAT --- ?

Thank you,

Posts / Replies

[Pradeep Khatri]

You will have to charge WCT @ 8% as mentioned in the MVAT Act.

[Jatin Mistry]

Thank you for your valuable reply.

I have discussed with my accountant today. He has also agreed to charge only WC VAT @ 8% on total value of work.

But I have 1 more query as follows:

he had also suggested that, there is 1 more option that we can also raise a bill as follows:

Saperate Bill for MATERIAL (i.e.: Aluminium Window/ Door/ Partition, etc.) with M VAT @ 12.5% 

&

Saperate Bill for LABOUR - Installation on site - Fixing (i.e.: only Labour Charges for Fixing on site) with M VAT @ 12.36%.

is it also acceptable or not ??

pls guide as soon as possible.

Thank you.

 

[vijay kumar]

Dear Sir, since it is a case of works contract, it is liable to VAT (as per your state VAT act) on the material value sold (which is stated to be 8%) and Service Tax on the labour component. Presently, service tax is 12.36% on the labour component with full cenvat facility or u may go for composition scheme of 4.8% without any cenvat facility on inputs. Thus, as stated u will have to raise two separate invoices - one for material value and another for service value. For your information, there is a threshold exemption upto Rs.10 lakhs in each Financial year on service tax.