Rajasthan value added tax
saurabh
(Querist) 31 August 2011
This query is : Resolved
CAN ANY PROVIDE THE DETAILS OF COMPOSITION SCHEME FOR WORK CONTRACTOR UNDER RAJASTHAN VALUE ADDED TAX ?
Raj Kumar Makkad
(Expert) 31 August 2011
The Joint Secretary (TRU), Tax Research Unit, Department of Revenue, Ministry of Finance, Government of India has issued a letter F. No. B1/16/2007-TRU to all officers of the Central Excise, Customs and Service Tax on the new services proposed to be taxed by the Finance Act, 2007. The new services come under the service tax net from 1 June 2007.
One of the new services brought to tax is “service provided in relation to the execution of a works contract”.
Works Contracts attract Value Added Tax / Sales Tax levied by State Governments. The State laws provide for deduction of certain expenditure relating to labour and services, architect fees, planning and design charges, etc. Where the expenses under these heads cannot be arrived at from the books of accounts, the dealer can opt for a lumpsum deduction and pay VAT / ST on the balance.
The Service Tax will now be levied on the Labour / Service part of the contract, after deducting the value of property in goods transferred in the works contract and the VAT / ST paid on the contract from the gross amount of the contract.
The contractors also have the option under the VAT /ST laws to pay a percent of the gross value of the contract, called the compounded rate of tax. In such cases, the value of the property in goods transferred and the value of services are not segregated.
The Central Government has introduced the compounded rate of tax on works contracts by proving that the contractor can opt to pay a 2% service tax on the gross value of the contract. The gross value of the contract shall not include VAT / ST paid on the contract. The contractor opting for the composition scheme shall not be entitled to CENVAT credit of duties or cess paid on any inputs in relation to that contract.
Please refer Notification No 32/2007 dated 22 May 2007.
prabhakar singh
(Expert) 02 September 2011
i agree with Expert : raj kumar makkad
