18AA. Deduction of charge towards labour, service, etc.

(1) The value of the goods at the time of the transfer of property in the goods (whether as goods or in some other form) involved in the execution of a works contract shall be determined by deducting the amounts paid by way of price for sub-contract made with a registered dealer, if any, pertaining to the works contract

(2) A registered dealer who claims any deduction referred to in sub-clause (c) of clause (30) of section 2, shall –

(a) maintain true and correct records for such deductions;

(b) prove to the satisfaction of the Commissioner that he has actually paid the amount in the year in which he claims such deductions; and

(c) furnish true and correct evidences for claiming such deductions at the time of assessment or when asked to furnish in any proceedings:

Provided that where the amount of charges towards labour, service and other like charges are not ascertainable or the accounts maintained by the contractor are not sufficiently clear or intelligible, a lump sum deduction shall be admissible in accordance with the percentage mentioned in the Table below, and the sale price of the goods at the time of transfer of property shall be determined accordinaly.












Description of Works Contract

Percentage of deduction.


Construction, improvement or repair of any building, road, bridge, dam, canal or other immovable property

Thirty per cent


Installation, fabrication, assembling, commissioning or repair of any plant or machinery, whether or not affixed to any building, land or other  immovable property 

Fifteen percent.


Installation, fabrication, assembling, commissioning of any Air conditioner plant, Air conditioner, Air cooler, whether or not fixed to any building or other immovable property. 

Ten per cent.


Assembling, fitting out, reassembling, improving, producing, repairing or otherwise treating of furniture, fixtures, partitions, including contracts of interior decoration 

Twenty per cent.


Installation, fabrication, commissioning or repair of lifts or elevators or escalators 

Fifteen per cent


Construction, fabrication, assembling, commissioning or repairs of bodies on chasis of motor vehicles including three wheelers and fire fighters or of Vessels of every description meant for Playing on water

Twenty per cent.


Overhauling or repairing or dismantling of any motor vehicle, vessels of every description meant for Playing on water or any other vessel propelled by mechanical means, any air craft or any equipment or part of any of the aforesaid items.

Twenty per cent


Fitting out, assembling, altering, ornamenting, re-assembling, blending, finishing, improving, processing or otherwise treating, ada ng or fabrication of any goods. 

Fifteen per cent


Ere on, Installation and commissioning of wind Ture Generator including power evacuation system

Thirty per cent.


Fixing of marbles, slabs, polished granite stones and tiles (other than mosaic tiles).

Twenty per cent


Fixing of sanitary fitting and plumbing

Fifteen per cent.


Painting and polishing

Twenty per cent.


Laying of pipes excluding plumbing

Twenty per cent.


Tyre re-trading

Thirty per cent.


Supply of goods in proving know-how, designs, labour, supervision, inspection, training or other services in connection with any of the operation specified in Serial Nos. 1 to 14 above. 

Twenty per cent.


Dyeing and in printing of textile

Thirty per cent.


Printing contracts.

Thirty per cent


Any other works contract

Twenty per cent

(3) The percentages shown in the Table shall be applied after first deducting from the total contract price, the amount paid by way of price for the entire sub-contract made with sub-contractor, if any.

(4) The value of goods so arrived at under this rule shall, for the purposes levy of tax, be the taxable turnover relating to the transfer of property of goods (whether as goods or in some other form) involved in the execution of a works contract