Specify the figures of VAT applicable on these construction materials used in the construction of apartment complexes. a) Cement and cement blocks b) Steel rods c) Bricks d) Wood for door and window frames. Also, are there different VAT rates for apartments and for stand-alone houses?
KVAT contains six schedules and items like cement and other construction materials including bricks, timber, wood, glass, mirror, roofing materials etc are contained in the Fifth Schedule.
The provision under which these goods are taxed is Section 11(3) which deals with 'Input Tax restrictions'. Construction activities are covered under 'Works Contract' as defined under Section 2 (37) of the KVAT Act. Any activity which amounts to a 'works contract' is taxed at the rate of 12.5 percent under Sl. No. 23 of the Sixth Schedule to the KVAT Act. Iron and steel are among items declared goods under Sl. No. 30 of the Third Schedule to the KVAT Act.
Corollary to this, Section 14 (iv)(iv) of the CST Act contains steel bars (rounds, rods etc). As the rate of tax under the Third Schedule is four percent, the rate on steel bars would be four percent.
As all the items mentioned, apart from steel rods, go into the construction of a building, they would be taxed under the Third Schedule of the KVAT Act. With respect to different VAT rates for apartments and for stand-alone houses, we have not come across such an exemption notification.
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Is VAT applicable on construction materials for apartments
by cherry » January 8th, 2010, 12:48 am
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