Navin Agicha

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::

  1. Construction Contract includes contraction of buildings, roads, water purification plant, Bridge, etc.
  2. Other Contracts, which includes installation of Plant and machinery, air conditions, painting & polishing, laying pipes, etc.

Rate of deduction of TDS:

  • 2% in case of Registered Dealer
  • 5% in Unregistered Dealer

When to deduct WCT TDS

WCT TDS is required to be deducted on payment basis.

Not Required to deduct WCT TDS

  • no deduction as provided under this clause shall be made in respect of any sale or purchase to which section 8 applies.
  • no deduction shall be made from any payment made to any sub-contractor by a principal contractor where the principal contractor has assigned the execution of any works contract, in whole or in part, to the said sub-contractor

PROCEDURE FOR WCT TDS

  • Remittance of tax to Government Treasure in MTR – 6 within 21 days from the expiry of the month.
  • Furnish the Certificate to the Contractor in Form No 402 immediately after deduction of TDS
  • Employer shall maintain the record of amount of tax deduction, furnishing of TDS certificate and payment of deduction to Government treasure in Form No 404.
  • Employer is required to file annual TDS return in Form No 424 with Joint Commissioner of Sales Tax within 3 months of the end of the year to which it relates.

WCT RETURN

 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.

(Author can be reached at agicha.navin@gmail.com)

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28 responses to “TDS on Work Contract (WCT TDS) – MVAT”

  1. BADRI says:

    I PAY 100000 A CONTRACTOR UNDER (WCT) HOWMANY AMT DEDUCT FOR TDS PLEASE TELL ME AND WHICH SECTION

  2. suraj gupta says:

    hii sir late interest payment is calculate on which amount ?? is it 1.25% on wct payable amt or any other amount ???

  3. durga sharma says:

    How to pay online WCT in maharashtra; Unable to find the link. 21 days are already. invoices are of 19.01.2017. any penalty/intt shall be there ?

  4. suraj gupta says:

    how to get wct form fill for deductee ????

  5. Sanjay Kulkarni says:

    What is the due date for filing of form 424 WCT TDs Return in current Year i.e. 2016 17

  6. Jitendra says:

    i have recd one bill with following details is tds & wct applicable to this & what is calculation.

    Supply & installation
    material Amt: 17,16,948 + vat13.5%: 231788 =19,48,736/-
    Installation Charges: 190772 + ST15%: 28616 =219388

    Total amt of Bill = 21,68,124/-
    Bill raised by pvt ltd com to firm.

  7. SEJAL says:

    Is TDS applicable on VAT Portion also if the same is shown as a separate line item in same Invoice?

  8. Sk Malek says:

    How can I login on WCT website and pay WCT. PLS GIVE ME URL

  9. Sk Malek says:

    What is the wct rate in the f.y. 2016-2017
    how can i pay challan of wct??
    how can i submit return on wct online???

  10. DADAN SINGH says:

    on which amount WCT is applicable.

  11. SUMIT says:

    I AM FROM DELHI. I GOT A WORK ORDER FROM GURGAON FOR REPAIR AND REFURBISH OF L.E.D. SIGNAGE WITH REPLACEMENT OF PARTS/RE-INSTALLATION OF SIGNAGE. I AM BEING PAID A LUMPSUM AMOUNT OF RS.50,000/- INCLUSIVE OF TAX/INSTALLATION ETC. HOW DO I RAISE THE INVOICE? CST TO BE SHOWN OR NOT? OR THE INVOICE WILL BE OF RS.50000/- INCLUSIVE OF TAX. PLEASE HELP.
    REGARDS, SUMIT

  12. Srinidhi says:

    Thanks, it was very useful!

  13. noor mohdmmad says:

    we are manufacturing unit of panel . we have received an order steel light in a company as a contract
    sir my question is that how to generate invoice…. (vat/excise/service tax applicable calculation provied me)

  14. Pavan Namburi says:

    We have given a single PO for installation of EPABX and phones. Vendor has given separate invoices for Material and Labour charges with VAT and service tax respectively. Whether this transaction is to be treated as Works Contract Tax – whether WCT TDS under Maha VAT and Reverse charge under Service tax are applicable on this transaction?

    Thanks in Advance

  15. YOGESH PATIDAR says:

    WELL CLEING & REPAIR WORK RS.60000/- WCT APPLICABLE OR NOT PLS WCT RATE &
    MIMIMUM WCT DEDUCTED RATE

    TKS.
    YOGESH PATIDAR

  16. anand says:

    Office branding purpose sunboard print tds applicable or not

  17. anand says:

    please let me office branding sunboard print so tds applicable or not

  18. Nagesh says:

    WCT tax applicable for agriculture

  19. kiran rane says:

    Is tds applicable on full bill amount .

    Amount 100.00
    wct 8% 8.00
    s.tax 5.60

    TOAL 113.60

    Tds will be applicable on Rs 100/- OR less amount

    please clarify.

  20. consturction tds tax applicable list says:

    all construction tds payment list actual payment paid work contract

  21. CA Harshit Kabra says:

    If the deductee is having excess set off Please let me know the TDS payment can be adjusted from TDS payable for FY 2014-15.Please reply

  22. prateek jotwani says:

    Hi, your article does not mention the threshold limit of 5 lakhs. My question I paid the vendor for Rs 2,00,000 in June 2014 assuming that the threshold limit will not be met. I again paid the vendor for 3,50,000 in october 2014. While making the payment i need to deduct TDS at 5,50,000 or at 50,000.

    Thanks,
    Prateek

  23. rajesh kumar says:

    Please tell us what a rate of Wct in 2015-16.

  24. ABC says:

    Dear Author,

    Please let me know if there is any separte rate defined for WCT deduction where contractors has opted for composition scheme for executing civil works contracts.

    Regards

  25. Sk. Maksud says:

    STDS (VAT) @ 3% on billing amount for Registered Dealer in West Bengal.

  26. Rajesh Kumar Morwal says:

    Mr.Navin Agicha, in case of VAT TDS on MVAT, you not mantion value of work limit, if any contractor corss the amouNt of Rs. 5Lacs then it is applicable 2% VAT TDS ON MVAT.

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