Sales tax/ wct
Himanshu Kothari
(Querist) 11 January 2014
This query is : Resolved
Sir,
1.Is Sale Tax is applicable in Sale of Plots.
2. Is Sale Tax Applicable in Sale of House /Flats.
3.When we are constructed by own.
4.We are giving construction contract to any contractor.
5. we are laible to deposit sales tax on sale of flats or we are only laible to Dedeuct WCT and deposit it to sales tax department.
What we have to do if the contractor have no TIn no..
i am from Uttarakhand State
Anirudh
(Expert) 11 January 2014
Dear Himanshu,
Sales tax (now it is VAT i.e. Value Added Tax) is applicable only on sale of goods.
The Plot and constructed Flats are not goods. Therefore on sale of plot or constructed flats no sales tax is leviable or payable.
If you give contract to a contractor to construct a building, what happens is that while constructing the building/flat, the contractor is using the goods like brick, cement, steel, wood, paint, etc. etc., apart from using the labour. As the cement, steel, wood etc., used during the course of construction gets passed on to you, by fiction, such goods used in the course of execution of works is also DEEMED to be sale of goods (though in reality, what you get is a flat/building and not brick, cement, steel etc.).
Therefore, the contractor is obliged to pay sales tax (called works contract tax) on the value of the material used in the execution of the contract.
Therefore, when you make payment to the contractor, you have to deduct WCT and remit it to the Govt.
The above is only a broad outline of the concept. For detailed answers you have to take appropriate consultations.
R K JAIN
(Expert) 11 January 2014
You need not to pay tax on sale of flat but you have to deduct the WCT form the contractor whether they are registered or not.
ajay sethi
(Expert) 11 January 2014
well advised by anirudh
