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What dou mean by work contract?with example?
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Answer Posted / abhivirthi tax and industrial
A person gives white cloth in bulk; say 1000 meters (for 500 shirts) for stitching purpose. The tailor takes the sizes of shirts and stitches and delivers the same to the customer. This is called pure labour job.
The same person gives the same white cloth and sizes of shirts for stitching purpose. The customer orders the tailor to deliver the shirts in various colours after dying. The tailor after receiving the white cloth handed over the same to a skilled person for dyeing purpose. The person who received the white cloth converted the white cloth into colour cloth and then handed over to the tailor and receives certain amount.
If the tailor supplies the white cloth and raw materials for dyeing and the skilled person completes the dyeing work only with the materials supplied by the tailor, such kind of works is called pure labour job.
If the tailor supplies the white cloth only and the other raw materials are purchased by the skilled person at his own sources and completes the dyeing work and handed over the same to the tailor, transfer of raw materials like Dyes etc., are involved and such kind of work is called works contract. The skilled person charges on contract basis for the works done by him i.e. dyeing of white cloth into colour cloth and such completion of work is called works contract.
In simple, gray cloth rolls were divided into 5.5 meters, or 6.00 meters and dyed and converted into printed sarees or bedspreads or other materials by a person utilizing the dyes and chemicals purchased by him is called works contract. If the gray cloth and other materials are supplied by the same party, and if there is no transfer of property involved such kind of work is called pure labour job.
Reply From:
ABHIVIRTHI Tax and Industrial Consultancy
R.R.JAGADEESAN
VAT PRACTITIONER AND INDUSTRIAL CONSULTANT
H-63, Palaami Enclave, New Natham Road,
Madurai-625014.
Cell: 9994990599
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