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TMI BlogWorks Contract Under Service Tax and Haryana VATX X X X Extracts X X X X X X X X Extracts X X X X ..... Works Contract Under Service Tax and Haryana VAT X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractee is required to deduct 4% TDS. Can the contractee, while deducting TDS may take the advantage of abatements provided under Rule 25 of Haryana Value Added Tax Rules 2003. 3- Practically most of the works contractors like Painters, Pest Controllers, Water proofing work, are not registered in Service Tax and/or HVAT. In such cases, while discharging own liabililty of Service Tax and VA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T what precautions should be taken by the Contractee. With Thanks and best regards Reply By Pradeep Khatri: The Reply: Dear Bhuwan, * Yes, it may be construed as Works Contract under HVAT Act. Works Contract is defined under Section 2 (ZT) of the HVAT Act, 2003:- (zt) "works contract" includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the assem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bling, construction, building, altering, manufacturing, processing, fabrication, installation, fitting out, improvement, repair or commissioning of any moveable or immovable property;. Vide Notification No. SO 67/H.A. 6/2003/S, 24/2014 dated 20th June 2014, VAT rate on TDS has been increased from 4% to 5%. You cannot take benefit of deduction under Rule 25 of the HVAT Rules. Under servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax you have to deposit your portion of tax and File the return. Under HVAT while deducting the TDS you would have to issue TDS Certificate and file the return accordingly. This is for you kind information. Regard YAGAY and SUN (Management and Indirect Tax Consultants) Reply By Bhuwan Joshi: The Reply: Dear Pradeep ji, Thanks for your reply. With respect to your reply at point no. 2, In W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks contract bills, generally the Works Contract Tax is borne by Contractee. Though it is called TDS. When contractee pays 5% Works Contract and the contractor gets abatement as per rule 25 then it means he gets a refund of tax from Department at the time of assessment which is equal to amount of abatement as TDS is deposited by Contractee at full rate i.e.5%. Is it correct, if yes, is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t unjust enrichment of the contractor. Regards Reply By Pradeep Khatri: The Reply: Dear Bhuwan, Please go through the appended exhibit in this regard. Contractor A is working under abatement scheme Particulars Amount in INR Total Tax Involed in INR Total Contract Value 1 500,000.00 45,000.00 Abatement availed as presecribed (say 20% of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V) 2 100,000.00 Net Taxable value on which contractor will levy tax 3 400,000.00 Works Contract rate (says 5.00%) levied by contractor 5 20,000.00 Gross amount of Bill/Invoice/Challan 6 520,000.00 Since the contract value is more than of the prescribed limit, Contractee is liable to deduct the tax i.e. 5% on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Total Contract Value 7 25,000.00 Scenarios Now there is two aspects to this exhibit Actual Tax assessed Demand/Refund 1 If at the time of assessment it is concluded that the goods involved in execution of WCT comes under the category residuary schedule and leviable to tax @ 12.50% then demand will be raised on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contractor 50,000.00 5,000.00 2 If at the time of assessment it is concluded that the goods involved in execution of WCT comes under the category normal schedule and leviable to tax @ 5% then refund will be provided to contractor 20,000.00 (25,000.00) Therefore, in our opinion, Unjust enrichment would not be applicable. We also seek professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relationship with your organization in the field of Indirect Taxation.
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YAGAY and SUN
(Management and Indirect Tax Consultants) X X X X Extracts X X X X X X X X Extracts X X X X
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