Meaning of work Contract: A works contract is an agreement which is a mixture of service or labour and transfer of goods. Under a works contract the contractor agrees to do certain job in execution whereof, certain goods are transferred to the contractee. Thus, an agreement of building construction, manufacture, processing, fabrication, erection, installation, repair or commissioning of any movable or immovable property, is a works contract. In relation to a works contract only that part of consideration which represents transfer of property in the goods involved in execution of the works contract, shall be taxable.
CONCEPT OF WCT TDS
The concept of WCT TDS is same of TDS, Like in TDS we deduct and Deductee can claim setoff in income tax, in same way dealer can claim setoff of WCT TDS in VAT Payment.
Definition of Works Contract:
Works Contract is defined under the MVAT Act, 2002
Section 2(24) :- the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract including, an agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property.
Works Contract is defined under the CST Act, 1956
Section 2(ja) :- works contract means a contract for carrying out any work which includes assembling, construction, building, altering, manufacturing, processing, fabricating, erection, installation, fitting out, improvement, repair or commissioning of any movable or immovable property.
Applicability of WCT-TDS:
1) TDS is applicable for Works Contract Transactions.
2) Employer employing Contractor for Work Contract is required to comply with requirement of TDS.
What is covered under work Contract::
Rate of deduction of TDS:
When to deduct WCT TDS
WCT TDS is required to be deducted on payment basis.
Not Required to deduct WCT TDS
PROCEDURE FOR WCT TDS
Form 424 Is Required To File Within 3 Months Of End Of Year In Which It Relates (i.e. 30th June)
LATE PAYMENT INTEREST
Interest on late payment is same like MVAT i.e. 1.25% p.m.
WCT PAYMENT CHALLAN
Challan MTR 6 Is Required To Be Paid Within 21 Days From The Expiry of The Month.
ISSUE OF FORM 402
Form 402 Is Required To Be Issued By Deductor To Deductee Immediately After Deducting WCT TDS.
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