Which Taxes are Applicable for Contract, VAT + CST

[Jatin Mistry]

We are a Contractors & Fabricators of Aluminium & Steel - Windows/ Doors/ Partitions/ Ceiling/ Structural Glazing/ Cladding work etc. We Purchase a Material (i.e.: Aluminium/ Glass/ Plywood/ Hardware/ ACP, etc.) from market & Also taking a service of Powder Coating / Anodizing on Aluminium or Steel from outside service providers & then we fabricates all of above & also do a installation (fixing) on site. So while preparing an Invoice Which Taxes are Applicable & How many Percentges. VAT/ CST/ ST/ WC VAT --- ? From Our Clients, 1 Client is a Building Contrctor and they do a various projects for their clients. As they told as follows: on 67% of Total Bill Value - M VAT @ 12.5% on 33% of Total Bill Value - ST @ 12.36% will be applicable. on 67% of Total Bill Value - M VAT @ 12.5% And on 33% of Total Bill Value - ST @ 12.36% will be applicable. Can w emake a bill as above or it is not perfect. Thank you,

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[Pradeep Khatri]

58. Determination of sale  price  and  of purchase price  in respect of sale  by  transfer of property in goods  (whether as good  or in some  other form)  involved in  the  execution of a  works contract.-

 (1) The  value  of the  goods  at  the  time  of the  transfer of property in the  goods  (whether as goods  or in some  other  form)  involved in the execution of a  works  contract may  be  determined by  effecting  the following deductions  from the  value  of the  entire  contract, in so far as the  amounts  relating to  the  deduction pertain to  the  said  works  contract:—

        (a)   labour  and  service  charges  for  the  execution of the    works 1[*.*.*.];

        (b) amounts paid  by  way  of price  for  sub-contract, if any,  to sub-contractors;

      (c) charges for planning, designing and  architect’s fees;

      (d) charges  for obtaining on  hire  or otherwise, machinery and tools  for  the  execution of the  works  contract;

      (e) cost  of consumables such  as water,  electricity, fuel  used  in the  execution  of  works   contract,  the  property  in  which  is  not transferred  in  the  course  of execution of the  works  contract;

         (f) cost  of  establishment  of  the  contractor to  the  extent to which  it is relatable to supply of the  said  labour  and  services;

        (g)  other  similar expenses relatable to the  said  supply of labour and  services, where  the  labour  and  services are subsequent to the  said transfer of  property;

       (h)   profit  earned by the  contractor to the  extent  it is relatable to the  supply of said  labour  and  services:

               Provided that  where  the  contractor has  not  maintained accounts which  enable a proper evaluation of the  different deductions as above or where the  Commissioner finds  that  the  accounts maintained by the contractor are not  sufficiently clear  or intelligible, the  contractor or, as the  case  may  be,  the  Commissioner may  in lieu  of the  deductions as above  provide a lump  sum  deduction as provided in the  Table  below  and  determine accordingly the  sale  price  of the  goods  at the  time  of the  said  transfer of property.

 TABLE

Sr. No.	Type of Works Contract	*Amount to be deducted  from the contract  price (expressed as  a percentage of the contract  price)
(1)	(2)	(3)
1	Installation of plant and machinery	Fifteen per cent.
2	Installation of air conditioners and air coolers.	Ten per cent.      cent.   cent.
3	Installation of elevators (lifts) and  escalators.	Fifteen per cent.
4	Fixing of marble slabs, polished  granite stones and tiles (other than mosaic tiles)	Twenty five per cent.
5	Civil works like construction of buildings, bridges, roads, etc.	Thirty per cent.
6	Construction of railway coaches on under carriages supplied by Railways.	Thirty per cent.
7	Ship and boat building including construction of barges, ferries, tugs, trawlers and dragger.	Twenty per cent.
8	Fixing of sanitary fittings for plumbing, drainage and the like.	Fifteen per cent.
9	Painting and polishing.	Twenty per cent.
10	Construction of bodies of motor vehicles and construction of trucks.	Twenty per cent.
11	Laying of pipes.	Twenty per cent.
12	Tyre re-treading.	Forty per cent.
13	Dyeing and printing of textiles.	Forty per cent.
2[14	Annual Maintenance contracts.	Forty per cent
15	Any other works contract.	Twenty five per cent]

3[*Note  : The percentage is to be applied after  first deducting from the total contract price,  the  quantum of price  on which tax is paid  by the sub-contractor, if any,  and  the quantum of tax separately charged by the contractor if the  contract provides for separate charging of tax.].

      4[1A)      In  case  of a construction contract, where alongwith the immovable property, the  land  or,  as the  case  may  be,  interest in the land,  underlying the  immovable property is to be conveyed, and  the property in  the  goods  (whether as  goods  or  in  some  other  form) involved  in  the  execution  of  the  construction  contract  is  also transferred to the  purchaser  such  transfer is liable  to tax  under this rule.  The  value  of the  said  goods  at  the  time  of the  transfer shall  be calculated after  making  the  deductions under sub-rule (1) and  the  cost of the  land  from  the  total  agreement value.

           The  cost  of the  land  shall  be determined in accordance with  the guidelines appended to the  Annual Statement of Rates  prepared under the  provisions of the  Bombay  Stamp  (Determination of True  Market Value  of  Property) Rules,  1995,  as applicable on the  1st January  of the year  in which the  agreement to sell  the  property is registered:

               Provided that, deduction towards cost of land under this  sub-rule shall  not  exceed  70% of the  agreement value.]

(2)   The  value  of goods  so arrived at  under sub-rule(1) shall,  for the  purposes of levy  of tax,  be the  sale  price  or, as the  case  may  be, the  purchase  price  relating  to  the  transfer of  property  in  goods (whether as  goods  or in some  other  form)  involved in the  execution of a works  contract.

          1  These   words   were  deleted by  Notification  No.  STR.1506/CR-38/Taxation-1  Dt.  8th September 2006.  Earlier  these  words  read  as,  ‘where  the  labour   and  service done  in  relation to the  goods  is subsequent to the  said  transfer of property’

       2  This  entry  was  substituted with  effect  from  1st  April  2006  by  Notification  No.  STR.  1506/ CR-38/Taxation-1 Dt.  8th  September 2006 Earlier  this  entry  read  as,  ‘14 Any other  works  Contract  Twenty  per  cent’

       3   These  words   were  substituted with  effect  from  1st  April  2005  by  Notification  No.  STR.1506/CR- 38/Taxation-1 Dt. 8th  September 2006.  Earlier  these  words  read  as, ‘*The  percentage is to be  applied after  first  deducting from  the  total  contract price,  the amounts paid  by way  of price  for  the  entire  sub-contract to sub-contractors, if any’

.      4   This  rule  was  inserted and  deemed to be  inserted w.e.f.  20th  June,  2006  by  Notification No.  VAT-1507/CR-53/Taxation-1.- 1st  June  2009.

[Mahaganapathi V]

Sir

From the above it is udnerstood that your opertaion falls with in the defenition of manufacturing. You buy material and incur labour and overheads to make the finished product. In your invoice you should charge necessary Excise duty, VAT - if with in the state - Excise duty + CST if outside the state. As for as installation is concerned that will be covered under service tax. The entire value of installation would fall under service tax.

 

Since ready made doors and windows are availabel in market your fabrication can be categorised as manufacture.

 

As far as the glazing and glading work that would come under both VAT and Service Tax (Works Contract Service) for which the previous reply shall apply. Pl refer the rates for service tax (Presently 4.8% + 3% surcharge = 4.94%