TAX RATES & CALCULATION OF TAXES

TAX RATES & CALCULATION OF TAXES

8. WORKS CONTRACT: HOW TO CALCULATE TAXABLE TURNOVER?

In case of turnover arising from the execution of the works contract or job work, the amount representing the taxable turnover shall exclude the charges towards labour, services and other like charges.

8.(a)    General Case

Charges towards labour services and other like charges shall include (that is to say taxable turnover shall not include the following),-

• labour charges for execution of works;
• charges for planning and architect's fees;
• cost of consumables such as water, electricity, fuel, etc. used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract;
• cost of establishment of the contractor to the extent it is relatable to supply of labour and services;
• other similar expenses relatable to supply of labour services;
• profit earned by the contractor to the extent it is relatable to supply of labour and services subject to furnishing of a profit and loss account of the works sites

Maintaining records by dealer

For this benefit, dealer is required to maintain proper records such as invoice, voucher, challan or any other document evidencing payment of charges to the satisfaction of the Taxing Authority.

8.(b)    Special Case

Where the amount of charges towards labour, services and other like charges are not ascertainable from the books of accounts of the dealer or the dealer fails to produce documentary evidence in support of such charges, the amount of such charges shall be calculated at the percentages of valuable consideration specified in the Table given below:

Percentages for works Contracts or Job Works

Type of contract	Labour, service and other like charges as percentage of total value of the contract
Fabrication and installation of plant and machinery			25%
Fabrication and erection of structural works of iron and steel including fabrication, supply and erection of iron trusses, purloins and the like.			15%
Fabrication and installation of cranes and hoists.			15%
Fabrication and installation of eleVATors (lifts) and escalators.			15%
Fabrication and installation of rolling shutters and collapsible gates.			15%
Civil works like construction of buildings, bridges, roads, darns, barrages, canals and diversions.			25%
Installation of doors, doorframes, windows, frames and grills.			15%
Supply of fixing of tiles, slabs, stones and sheets.			20%
Supply and installation of air conditioners and air coolers.			15%
Supply and installation of air conditioning equipment including deep freezers, cold storage plants, humidification plants and de-humidors.			15%
Supply and fitting of electrical goods, supply and installation of electrical equipments including transformers.			15%
Supply and fixing of furniture and fixtures, partitions including contracts for interior decoration and false ceiling.			15%
Construction of Railways coaches and wagons on under carriages supplied by Railways			20%
Construction or mounting of bodies of motor vehicle and construction of trailers.			20%
Sanitary fitting for plumbing and drainage or sewerage.			25%
Laying underground surface pipelines, cables or conduits.			30%
Dyeing and printing of textiles.			30%
Supply and erection of weighing machines and weighbridges.			15%
Painting, polishing and white washing.			30%
Tyre retreading			40%
Photography and Printing Contracts			30%
Electroplating, Electro Galvanizing and Anodizing and the like			40%
All other contracts not specified any of the above points.			20%

Provided further that where the dealer claims deduction on account of labour, services and other like charges exceeding the percentages of valuable consideration (of total contract value) specified in the above Table, the assessing authority will have to record reasons in writing for accepting the claim of the dealer.

Goods and service tax in India will lead to a shift in the levy of taxation from origin based taxation to consumption based of taxation.

Follow Us on