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Handling Works Contract in VAT Return

To handle Works Contract, Three VAT Classes are provided, namely: -

1.      LABOUR
2.      W.CONTRACT LOCAL TAXABLE 05.50%
3.      W.CONTRACT LOCAL TAXABLE 13.75%

Entry may be passed as under: -
  
A/c Head
VAT Class
Debit
Credit
Works Contract (Sale 5.5%)
W.Contract Local Taxable 05.50%
 
600.00
Vat Output With Surcharge
Output Tax (Vat)
 
33.00
Labour Charges
Labour
 
367.00
Party A/c
 
1000.00
 

In the above example, we have assumed that 60% of the gross works contract amount is taxable sale and 40% is labour amount.

if you mark 'Yes' against 'Add VAT in W.Contract Gross Amt.' under 'VAT-15' category of VAT Return Settings then

In Form VAT-15, gross amount will be shown as Rs. 967.00 .  Rs. 367.00 shall be deducted as labour amount.

In Worksheet, information will be shown as under:


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