Tds on work contract tax
AMARENDRA SUTAR
(Querist) 12 September 2011
This query is : Resolved
WCT (work contract tax) is now solely under jurisdiction of Sales tax authority of the concerned state. WCT is applicable where work/composite supply is being executed i.e. contract consisting of supply & service both. Payer will have to deduct WCT and deposit the same in the local ST authority. Confusion is arising where an entrepreneur of different state entered in to an agreement for work.
1) Is the payer capable to deduct WCT when the contractor has not the VAT no in the state wherein the work is being executed though he has got the CST No?
2) What is the mechanism to tackle the transaction, I am from the state of Orissa?
AMARENDRA SUTAR
(Querist) 12 September 2011
if convert the whole question in to line i.e. is WCT is deductible against CST claim.
Raj Kumar Makkad
(Expert) 12 September 2011
1. Yes. It is mandatory to deduct irrespective of the fact the contractor is registered under VAT of his State of not. Payer has to deduct the perform his duty.
2. Enquuire from your nearest ST office.
R.Ramachandran
(Expert) 12 September 2011
Dear Mr. Sutar,
You have to come out with clear facts, which are not clear presently.
If the contractor executing the works contract procures the materials involved in the execution of the works contract, through CST purchase, then there will be no incidence of TDS on the materials subjected to CST.
Therefore, before reaching any conclusion, the complete facts of operation by the contractor is to be known.
AMARENDRA SUTAR
(Querist) 23 September 2011
Dear R.Ramachandran Sir,
1)We are doing the office renovation work in Bhubaneswar,Orissa.
2)The vendor is from Delhi.
3)Agrrement is with him at Sq feet rate i.e. there no agreemnt for supply & service separately.
4)Vendor is claiming with Sq feet rate & the tax structute is VAT on 67% of the claim & Serice tax on 33% of the claim.
5)During claim vendor is mentioning CST no instade of VAT because he is not a dealer in Bhubaneswar.
6) Hope you will get the clarity against my query & able give your valuable advice.
R.Ramachandran
(Expert) 23 September 2011
Dear Mr. Sutar,
If the contractor moves the goods from Delhi to Orissa - the documents should show that the goods have moved on a/c ... (your company's name) and it should have been subjected to CST.
When the contractor submits bill to you, he should clearly indicate in the invoice that the materials used by him are subjected to CST and he should make available the photocopy of the documents along with the invoice. In which case, you need not deduct TDS (towards Works Contract VAT) on the cost of the material. Without those supporting documents, you have no other go, but to effect TDS. Additionally, also get an indemnity bond from the contractor to the effect that in case the claim made by him i.e. he has effected CST purchase for executing the works contract turns out to be incorrect and the State VAT Authorities proceed against you for non-recovery of TDS, then he will indemnify you from all the consequences thereof.
However, you may have to deduct applicable TDS (Income Tax).
