He has to file Normal DVAT 16 Return in case of Works Contract And DVAT 17 in case he is applying for Composition Scheme
Suppose Tax Rate applicable on Works Contract is 12.5%
He can deduct this TDS from his Vat Payable and pay balance tax if any
Example 1
Suppose Construction service provided of 40 lacs+12.5% WCT
Vat on Materials used in production =8 lacs+ 12.5% Vat
What is WCT payable assuming TDS Deducted by Contractee @ 4%
View answer
In this case,
Output WCT=40*12.5%=5
Input Vat=8*12.5%=1
WCT Payable=5-1=4 lacs
Less
TDS=40*4%=1.6 Lacs
Balance WCT payable=4-1.6 lacs=2.4 lacs
Example 2
Suppose Construction service provided of 100 lacs+1% WCT under Composition
Vat on Materials used in production =30 lacs+ 12.5% Vat
What is WCT payable assuming TDS Deducted by Contractee @ 4%
View answer
In this case,
Output WCT=100*1%=1 lacs
Input Vat=0
WCT Payable=1-0=1 lacs
Less
TDS=100*4%=4 Lacs
Balance WCT payable=0
Refund of WCT-1-4=-3 LACS