What is a Works Contract?

There are certain contracts which are combination of both goods and services.

For example:- In construction contract where builder has to make a building, it involves both materials and services. .Hence, both VAT/CST and Service tax is applicable             

 

As per CST Act,

In the case of a transfer of property in goods

(whether as goods or in some other form) involved in the execution of a works contract,

the sale price of such goods shall be determined in the prescribed manner *

by making such deduction from the total consideration for the works contract as may be prescribed

and such price shall be deemed to be the sale price for the purposes of this clause.

 

Note: So far no rules have been framed by the Central Government.

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.