Majboot Constructions undertakes works contracts and maintains sufficient records to quantify the labour and other service charges. From the details given below, calculate the taxable turnover, input tax credit and net V
CS Professional · Advanced Tax Laws and Practice · PYQS · December 2015
Majboot Constructions undertakes works contracts and maintains sufficient records to quantify the labour and other service charges. From the details given below, calculate the taxable turnover, input tax credit and net VAT payable under the State VAT law (output VAT rate is 12.5%): Total contract price (excluding VAT) ₹ 90,00,000 Materials purchased and used for the contract taxable @ 12.5% VAT (inclusive of VAT) ₹ 16,87,500 Labour charges paid for execution of the contract ₹ 20,00,000 Other service charges paid for the execution of the contract ₹ 12,00,000 Cost of consumables used not involving transfer of property in goods ₹ 3,00,000 Majboot Constructions also purchased a plant for use in the contract for ₹10,40,000 (inclusive of VAT). In the VAT invoice relating to the plant, VAT was charged at 4% separately. Assume 100% input tax credit is available on capital goods immediately.
Answer & Explanation:
Computation of taxable turnover, input tax credit & Net VAT payable Particulars Amount ₹ Total Contract Price 90,00,000 Less: Deductions admissible: Labour charges paid 20,00,000 Service charges paid 12,00,000 Cost of consumables 3,00,000 (35,00,000) Taxable Turnover 55,00,000 Output VAT payable @12.5% 6,87,500 Less: Input tax credit admissible On the material purchased (16,87,500 X 12.5/112.5) 1,87,500 On the plant purchased (10,40,000 X 4/104) 40,000 (2,27,500) Net VAT payable 4,60,000 Note: Under works contract, VAT is imposed on the sale price of the goods in which there is a transfer of property. Labour and other service charges incurred for such execution are deductible. Cost of consumables has been treated as service portion as ownership is not transferred in those goods.
Topics: VAT
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