WCT, TDS , Service tax implication on new startup
Can any one Explain the implication and rates of taxes for WCT , TDS & Service tax for a new entity with first turnover above 10 Lacs..
Thanks in advance
You can refer already posted threads for your all doubts, All about Service Tax on Works Contract and Karnataka VAT - Composition scheme for Works Contractor
Lets first understand what services comes under WCT scheme-
As per Definition of Works Contract provided in The Karnataka Vat Act,2003-
Works contract includes any agreement for carrying out for cash, deferred payment or valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, improvement, modification, repair or commissioning of any movable or immovable property.
Also the definition of Dealer includes Works Contractors.
Section 4 of the VAT Act prescribes the liability of tax on WCT dealers.
If as a works contractor you take the benefits of Composition scheme the tax rate will be 4% and you will not be able to take benefits of input tax.
If you excute any work of center government or state government or any company owned by either of them, those companies will deduct tax equivalent to tax on contract prize.