The company gave me an opportunity to attend a workshop on Analysing works contract taxes yesterday (December 21, 2012).

The copy of the presentation is enclosed. Takeaway from the workshop are 1. A contract in which there is transfer of material during the execution of contract is Works contract. 2. In such contracts, the transfer of property in goods is taxed under local VAT as Works contract tax and the service portion is taxed under Finance Act 2012, as Service tax. 3. Sale of goods means sale of Very good in which property eventually passes 4. The Centre and state draws the power for taxation from seventh schedule of the constitution which has two lists. The first list is gives power for the centre while the second gives power to state 5. VAT is charged only on value of property transferred and not on the entire value of the works contract 6. The constitution permits only 3 composite transactions to be split into supply and service they are Works contract, catering and hire purchase since 1983 7. The dominant test for deciding whether a contract falls into one category or other is to as what is the substance of the contract supply of material or labour