B.P Associates LLP

R.9 Determination of turnover of sale of goods involved in the execution of a works contract U.P. VAT RULES

R.9 Determination of turnover of sale of goods involved in the execution of a works contract-

(1) Subject to other provisions of this Rule, the tax on turnover of sale of goods where such sale is affected by way of transfer of property in goods (whether as goods or in some other form) involved in the execution of a work contract shall be computed on the taxable turnover of sale of taxable goods. For the purpose of determining the taxable turnover of sale of such goods, the amounts specified below shall be deducted if they are included in the gross amount received or receivable in respect of the works contract:-

(a) all amounts representing the value of goods consumed in execution of the works contract;in which property in goods is not transferred in the execution of the works contract;

(b) all amounts representing the value of exempt goods and amount of profit thereon;

(c) all amounts representing the rent paid or payable in respect of machinery and other equipments taken on hire for use in the execution of such works contract;

(d) all amounts representing the value of service and labour and profit thereon;

(e) all amounts representing the value of goods in which property has been transferred in the execution of the works contract as a result of sale in the course of inter-state trade or commerce;

(f) all amounts representing the value of goods in which property has been transferred in the execution of the works contract as a result of sale in the course of export of goods out of the territory of India or sale in the course of import of goods into the territory of India;

(g) all amounts representing the value of goods in which property has been transferred as a result of a sale outside the State;

(h) all amounts representing the value of non-vat goods purchased from within the state in the circumstances in which the dealer executing the works contact himself is liable to pay tax on turnover of purchase of such goods;

(i) all amounts representing value of non vat goods where such goods are purchased by the dealer from a registered dealer.

(j) the amount representing the cost of establishment and other similar expenses of the contractor to the extent it is relatable to supply of labour and services, and profit there on.

Explanation: For the purpose of clauses (a), (b) and (e) to (h), value of goods referred to in such clauses include amount of profit thereon.

(2) Where any amount has been deducted by the contractee from the amount of the contract on account of breach of any condition of the contract, such amount shall be deemed part of amount payable to the contractor in respect of such contract

(3) Where accounts maintained by the contractor do not show separately the value of labour and services and amount of profit accrued on such labour and services, or accounts maintained by the dealer are not worthy of credence or if the dealer has not maintained accounts, for the purpose determining turnover of goods in which transfer of property in goods has taken place, in cases other than those mention in the table below, an amount, representing twenty percent of gross amount received or receivable, shall be deducted towards labour and services and amount of profit accrued thereon and in the cases described or mentioned in the column 2 of the table given bellow, amount of deduction towards such labour and services and amount of profit accrued thereon shall be computed at the rate percentages, given in the column 3 against the entry in column 2 of the table, of the amount received or receivable.

Table

Sl. no.	Description of works contracts	Rate**
1	2	3
1-	Fabrication and installation of plant and machinery	10%
2-	Fabrication and erection of structural works including fabrication, supply and erection of iron trusses, purline.	10%
3-	Fabrication and installation of cranes and hoists	10%
4-	Fabrication and installation of elevator(lifts) and escalators	10%
5-	Supply and installation of air conditioning equipment including deep freezers, cold storage plants, humidification plants and dehumidifier	10%
6-	Supply and installation of air conditioners and air coolers	10%
7-	Supply and fitting of electrical goods, Supply and installation of electrical equipment including transformers	10%
8-	Supply and fixing of furnitures and fixtures, partitions, including contracts of interior decorations	10%
9-	Construction of railway coaches and wagons on under carriages supplied by railways	10%
10-	Construction of bodies of motor vehicle and construction of trailers	10%
11-	Fabrication and installation of rolling shutters and collapsible gates	30%
12-	Civil works like construction of building, bridge, roads, dams, barrages, spillways and diversions, sewages and drainage system	30%
13-	Installation of doors, doors frames, windows, window frames and grills	30%
14-	Supply and fixing of tiles, slabs, stone and sheets	30%
15-	Sanitary fitting for plumbing, for drainage or sewerage system	30%
16-	Whitewashing, painting, and polishing	40%

Explanation: For the purpose of this rule, where period of execution of a works contract is spread over several tax periods or several assessment years, the aggregate, of all amounts of deductions towards labour and services; and amount of profit accrued thereon, shall not exceed the percentage of the gross amount receivable in respect of execution of such works contract.

(4) For removal of doubts it is made clear that, for the purpose of this Rule, in arriving at the turnover of sale of goods involved in the execution of a work contract, amounts of following nature shall not be deducted from the gross amount receivable.

(a) any amount proposed to be deducted in the name of any tax or fee or any other levy;

(b) any amount which has been deducted by the contractee from the contractor as demurrage or penalty or a fine or in any other name for breach of any conditions of the contract or otherwise;