composite contract, VAT + CST

[saket s]

We have outsourced a contract for Interiors - Composite contract - Material & labour to be executed at Vijayawada.The contractor does not hold registration in AP.He has a registration in Telangana.

What is the rate of TDs to be deducted on the contract value as a whole, if he has not registered in AP. Liability of the contractee to deduct and issue certificate.

If the contractee has to deduct, on what value and at what percentage should TDS be deducted and remit to the Govt and issue certificate.

Thanks

Saket

Posts / Replies

[YAGAY AND SUN]

There is no provision in the CST Act to deduct the TDS on Interstate Works Contract. If the contractor get the RC in the State where the WC is being conducted then provision of deduction of TDS under State VAT Laws would be applicable otherwise not.

[Ganeshan Kalyani]

Saket ji, the supply is interstate. In that CST shall apply on material portion.

Further, VAT TDS is under State VAT law and state VAT law doest not have power to tax interstate transaction. Centre has not given power to states to tax local sales.

[Ganeshan Kalyani]

Correction in my last sentence of previous reply. Pls read as "Centre has not given power to states to tax interstate transaction. "