Table of Contents
What is the HSN code for Works Contract?
GST Rate on Works Contract
| Description | HSN Code | GST rate |
|---|---|---|
| Works contract mostly involving earth work to government | 9954 | 5\% |
| Oil exploration works contract (construction) | 9954 | 12\% |
| Works contract by sub contractor to main contractor (construction) who in turn provides above services to the government | 9954 | 12\% |
Is VAT applicable on service tax in works contract?
Service tax is payable on the value of works contract after deducting value of goods from the gross value. The gross amount included will not include value added tax and sales tax.
Is ITC available for works contract?
ITC shall not be available for any work contract services. ITC for the construction of an immovable property cannot be availed, except where the input service is used for further work contract services. For example, XYZ Contractors are constructing an immovable property. They cannot claim any ITC on the works contract.
What is turnover limit for HSN code under GST?
HSN/ SAC codes HSN/SAC code shall be mentioned in Tax Invoice as well as furnished in Table 12 of FORM GSTR-1. The taxpayers who have turnover below the limit of Rs 1.5 Crore will have to mention the description of goods/service in place of code.
How is VAT calculated on works contract?
VAT has to be accounted for at the rate of 8\% of the total value of the contract. You can claim set-off calculated at the rate of 16/25 of the VAT you have been charged on the purchase of all goods including capital goods purchased for use in the execution of the works contract.
How is service tax and VAT calculated on works contract?
Service Tax is leviable on the value equivalent to the gross amount charged for the works contract less value of the transfer of property in goods involved in the execution of the works contract which is leviable to VAT/ sales tax [Rule 2A of the Service Tax (Determination of Value) Rules, 2006].