ARTICLE ON MAHARASHRA VAT ON BUILDERS - PRESENT ISSUES (Compilation)
2,481 views
Skip to first unread message
girish kulkarni
Aug 11, 2012, 12:11:04 AM8/11/12
to nash...@googlegroups.com, Than...@yahoogroups.com, ca pune, jalga...@googlegroups.com, meracon...@yahoogroups.co.in, mirar...@yahoogroups.co.in, SOLAPUR CA, ICAI_CIRC...@yahoogroups.com
Recently, The Maharashtra Sales Tax department raided the offices of 13 city builders that have allegedly defaulted on payment of VAT. Among the real estate developers whose offices were raided are Keystone Realtors, Acme Group, Marathon Group, Evershine Builders, RNA builders, Sumer Builders, Bhoomi Realty, Ekta Supreme Housing and Naman Developers, Dosti Group and Ajmera Group. These builders are supposed to pay VAT on sale of under-construction flats but have been defaulting on the payments, said a senior sales tax official. Their pending dues are estimated to be Rs 25-30 crore, he added.VAT was imposed on sale of flats in 2006, but many builders had moved Bombay High Court, challenging the constitutional validity of the rule. The High Court in April dismissed their petition. Following the HC directives, the Sales Tax department has begun collecting the pending dues from builders, said an official.
Commissioner of Sales Tax, Maharashtra, Sanjay Bhatia said, “We will wait for other builders to come forward and pay pending VAT. In case they do not, we will take action against them, too.” The builders, according to an officer, are supposed to clear their dues. After mounting this pressure , The govt issued trader circular as a final warning for Registration and payment of taxes with a red corner warning to register before 16 th Aug 2012.
It may be noted that already a composition scheme @ 5% is in operation, which is effective from 20th June, 2006i.e., the date on which the transfer of property under construction was brought within the ambit of VAT.The Maharashtra Government in the State budget of 2010 has also introduced a composition scheme on sale of under construction property along with land or interest in land @ 1% of the agreement value. The scheme is effective from 1st April, 2010 but the Notification in respect of the same about the manner in which the tax is to collected by the builder/developer has not yet come. There is no setoff for inputs.
The case which is recently went in favour of Govt of Maharashtra in Bombay High Court (being Tax writ petition No. 2022 of 2007) was based on levy of tax on property under construction itself is challenged by the Maharashtra Chamber of Housing Industry (MCHI), an association of builders.The main issue involved in the writ petition is the competency of the State Legislature to enact the definition of Works Contract in the manner which suggests its applicability to the builders/developers, in addition to the contractors. The definition talks about transfer of property in goods in the execution of works contract including the building, construction, . . . . . The Government is competent to levy tax on construction (sale of goods involved in construction). Article 366 read with Article 246 (2) of the
Constitution has authorised it to do so. But power to levy tax on building; i.e., sale of flats is unimaginable. It appears that prima facie the High Court is convinced about this position and ordered interim relief for the members of the Association. The High Court has directed that the members of the MCHI should not be treated as ‘dealers’ liable to tax under the MVAT Act, 2002 in respect of sale of flats on ownership basis under the Maharashtra Ownership Flats Act, 1963 (MOFA Act), provided such members of MCHI submit the data and documents as mentioned in the Court order.
The Government has introduced a composition scheme @ 1% on the agreement value of the transfer of flat/unit under construction without providing any deduction for land, etc wef 1-4-2010. There was an impression in the mind of people that only under construction flats/units sold after 1st April, 2010 are chargeable to VAT @ 1%. This is not so, the amendment regarding tax on flat/unit under construction is effective from 20th June, 2006. Due to recent Trade Circular 14T, Tax is now also payable under earlier composition scheme of 5%.
It is pertinent to note that the above cost can be avoided if a ready flat is purchased after the builder obtains completion certificate.
FREQUENTLY ASKED QUESTIONS [FAQs] ON TAXATION OF DEVELOPERS
1. Admitting while not accepting that the State of Maharashtra can levy tax on such a transaction, will our members get the credit of input tax paid while effecting purchases of materials like cement, iron 86 steel etc. required to be used in the Construction project. The members would pay the tax under the MVAT Act as the applicable rate of 4% or 12.5% depending on the material required to be used?
Ans: Yes, they will get input tax credit, if they paid the taxes u/r 58 or u/s 42 (3).
2. In our life of industry, the practice is that an Agreement to Sell is prepared much in advance at the time when a prospective buyer book the accommodation in a building under construction and the developer concerned undertake to give possession of the accommodation so booked after obtaining completion certificate with the promised Position, we would like to know as to at what point of time the VAT under the amended law would be payable?
Ans: Taxability arises on agreement. Tax is levied as and when the installments become due and payable or are received, whichever is earlier.
3.Whether the levy of VAT on agreement for under construction flats/ shops etc. is covered with in the amended definition of Works Contract? Is there any scope for escaping this levy?
Ans: Yes. It is covered. No Scope for escapement.
4.What is the rate of tax under VAT Act applicable for agreement to sell under construction flats?Ans: Tax rates would be those which apply to the goods in which property is transferred.
5. What is the effective date from which the VAT will be applicable? -
Ans: The date of amendment i.e. 20 June, 2006.
6.The agreement to sell the flat was executed before 20.06.2006 and the building was under construction and possession is given after 20.06.2006. Whether the VAT will apply in Such case because the agreements were executed prior to 20.06.2006? If yes how the sale value will be determined for calculation of VAT? Whether the amount received prior to 20.06.2006 will be exempt from VAT? .
Ans: Yes. VAT will apply. It will be levied on value received or receivable after 20th June, 2006.
7. Many times mere advances are received and agreement is executed much later. What will be the point of liability whether at the time of receiving the advances or at the time of execution of the agreement or thereafter on possession?
Ans: Tax will be levied from the date of the agreement. The amount of advance, as and when it is adjusted towards the agreement amount, will be taxed.
8.The builders receive non-refundable deposits and other charges under the agreement such as electricity deposit, water charges, legal charges, development charges etc. Whether such receipts will also form part of sale price for VAT?
Ans: The amounts which are received as deposits will be a deduction to the extent such amounts are actually paid to other authorities.
9. In the under construction flats the amounts are received in installments. How the sale price will be determined? Whether the actual receipts will be taken as sales or the whole of the agreement value will be taken as sale at the time of execution of the agreement, even though the amount is yet to be received?
Ans: Received or receivable. Receivable means due and payable.
10.Can the VAT applicable in above cases be collected by raising a debit note or the same should be mentioned in the agreement itself? Whether VAT should be collected on each installment or at one go upon execution of the agreement?
Ans: Yes. It can be collected by raising a debit note. Specific mention in the agreement is a choice of the contracting parties. It should be collected as and when the instalment becomes due.
11.What will be the amount of set off available in such cases i.e. full set off of VAT paid on purchases or part of that?
Ans: Purchases made on or after 20th June, 2006, will be eligible for set off subject to rules.
12. Whether any interest or penalty will be attracted for non registration with sales tax authorities under VAT and no submission of VAT returns for the transactions executed for sale of flats/ shops under construction between intervening period i.e. 20.06.2006 to 07.02.2007?
Ans: Yes.
13.What will be VAT the implications where mere advances are received from buyers and agreement for sale is not executed with the buyer?
Ans: There is no tax liability.
14. If composition scheme is not opted then what is the rate of tax and how the sales price will be determined? What are the deductions permissible like labour charges, profit margin etc. In such cases how the set off will be worked out?
Ans: As per rule 58. Set off is related to purchases and not sales.
15. A Builder may construct more than one project, in such case, whether different calculation method for different project can be applied?
Ans: Yes, he may adopt different method for each project, but he is not allowed to change the method till the completion of that project.
16. What are the various options available to the developers for disclosing tax liability?
Ans: Developers can discharge their tax liability by any of the following option:-
From 20.06.2006 to 31.03.2010
1. Composition Scheme U/s 42 (3)- Under this scheme developer has to pay 5% tax on the agreement value. Land deduction is not available. Input tax credit is available subject to the reduction of 4 per cent.
2. Actual Expense Method U/r 58- Under rule 58, the deduction of Labour 86 service charges is available on actual basis. Land deduction is also available. Set-off will be calculated subject to the condition u/r 53 and 54.
3. Standard Deduction Method U/r 58- Under rule 58, the deduction of land cost will be allowed. Thereafter 30% standard deduction from remaining amount will be available as per proviso to sub-rule 1. Set-off will be calculated subject to the condition u/r 53 and 54.
After 01.04.2010
The developers can opt for fourth option also, under this option u/s 42 (3A), developer has to pay 1% tax on agreement value. No land deduction and input tax credit is available.
Needless to mention that, the developers will be required to make the payment of interest according to the provisions of law.
After The Maharashtra Govt Budget 2010 Notification No. VAT. 1510/CK-65lTaxation-1 dt. 9th July, 2010, the State Government has notified such scheme.
Composition scheme for Builders and Developers
The scheme is available to a registered dealer who undertakes the construction of flats, dwellings or buildings or premises and transfer them in pursuance of an agreement along with land or interest underlying the land .
- Rate of MVAT payable : 1% of
- aggregate amount specified in the agreement or
- value specified for the purpose of stamp duty in respect of agreement under Bombay Stamp Act, 1958, …….. whichever is higher
- Conditions.
- All agreements which are registered on or after 1st April, 2010 can be covered under composition. Registration of agreement is must. Agreements entered before 1st April, 2010 but registered on or after 1st April, 2010 will be eligible to be offered under composition scheme;
- The claimant dealer (dealer claiming benefit of composition scheme) should included theagreement value in turnover of sale in the period in which agreement is registered;
- The claimant dealer should make e-payment of MVAT payable against such agreements for the purpose of filing return;
- The claimant dealer will not be entitled to any set-off of taxes paid in respect of purchases of goods used against opted works contract;
- The claimant dealer must not used any goods or property in goods purchased from out of the state against C-Form for the purpose of contract for which composition of tax is opted. i.e. in relation to flat, dwelling, etc against which he is paying tax under composition scheme, he must not used goods purchase against C-Form.
- The claimant dealer shall not issue declaration in Form 409 to sub-contractor in respect of work contract for which composition is opted;
- The claimant dealer shall not be entitled to change the method of computation of tax liability in respect of contract for which he has opted fur this composition scheme;
- The claimant dealer shall not issuc Tax Invoice.
The Maharashtra Government in the state budget of 2010 introduced a composition scheme on sale of under construction property along with land or interest in land @ 1% of the agreement value. There is no set off for inputs.It may be noted that already a composition scheme @ 5% is in operation which is effective from 20th June, 2006 i.e. the date on which the transfer of property under construction was brought within the ambit of VAT.
There is an impression in the mind of people that this amendment and only under construction flats/units sold after 1st April, 2010 are chargeable to VAT @ 1%. This is not so, the amendment regarding tax on flat/unit under construction is effective from 20th June, 2006. In this budget the Government has come out with new composition scheme of 1% of agreement value without any deduction for land against earlier composition scheme of 5%.
Subsequently provision for MVAT Act were amended and section 40(3A) was inserted by Mah Act No XII of 2010 dated 29-4-2010 w.e.f. 1-4-2010. Section 40(3A) empowers the State Government to notify by publishing in Official Gazette, i) a scheme of composition for the registered dealers who undertake the construction of flats, dwelling or buildings or premises and transfer them in pursuance of an agreement along with the land or interest underlying the land and ii) prescribe the rate of tax by way of composition, in lieu of the amount of tax payable on the transfer of goods (whether as goods or in some other form), in execution of such works contracts by such registered dealer under this Act.
Bombay HC dismisses petition challenging applicability of VAT on sale of flats
The Bombay High Court appears to have served a body blow to realtors in Maharashtra.The HC dismissed their petition that challenged the applicability of Value Added Tax(VAT) on sale of flats. The builders argued that VAT is not payable on immovable property.The court, however, upheld the 2006 amendments to Maharashtra Ownership Flat Act that brought “construction” on the tax radar.The builders will now have to cough up outstanding VAT dues since 2006. The builders will now challenge the order in the Supreme Court.
TRADE CIRCULAR
No. Build-Devep/Adm.Relief.06-10./Adm-8
Trade Cir. 14T of 2012 Dated – 06.08.2012
SUB: Grant of Registration and Administrative Relief to Developers.
BACKGROUND:
1. The Hon. Bombay High court has delivered judgement in case of Maharashtra Chamber of Housing Industry (MCHI) vs. State of Maharashtra in respect of the writ petition no. 2022 of 2007. The constitutional validity of the amendment to section 2(24) of the Maharashtra value added tax Act, 2002,Notification dated 97-2010 notifying a composition scheme for Builders, Developers was upheld. The Promoters and Builders Association has filed special leave petition No. 17738 and 17709 of 2012 before the Hon’ Supreme Court of India. Hon’ Apex Court admitted the petition but no stay is granted to the judgement of Hon Bombay High Court.As a result, the developers are liable to pay tax under Maharashtra Value Added Tax Act, 2002 with effect from 20th June, 2006.
2. Considering the above position, it is expected that large number of developers will come forward to obtain theregistration under Maharashtra Value Added Tax Act, 2002. In order to facilitate obtaining registration, grant of administrative relief for unregistered period, and filing of return for period starting from 20/06/2006 for these dealers, following measures are being taken by the Sales Tax Department.
a) At every division, a dedicated officer of registration branch will be assigned with the job of granting registration to developers. Display board of such facility will be placed at the conspicuous location in office premises.
b) No pre-registration visit will be conducted to the place of business of developers.
c) At present, after uploading of registration application, the system generated appointment date is communicated to the dealer. However in case of developers, a dedicated registration officer will attend to such dealers on next day of uploading the registration application, irrespective of the appointment date given by system.
d) Registration number should be granted to such dealers on the same date on priority, subject to the developers submitting the necessary documents.
e) As per the earlier Circular instructions, if there is a delay in obtaining certificate of registration beyond a period 5 years, then this delay is treated as an attempt to evade the tax and such dealers are not considered for grant of administrative relief. However for developers, the delay beyond a period of 5 years in obtaining registration will not be treated as an attempt to evade tax and these dealers will be granted administrative relief if they apply forregistration before 16/08/2012.
f) If the developer applies for registration on or before 16/08/2012 and applies for administrative relief on or before 31/08/2012 alongwith proof of filing of returns and payment of tax for unregistered period, then the compounding fee for all unregistered period shall be levied at Rs. 5000 only.
However, if any developer fails to apply for registration and administrative relief before above-mentioned date then the compounding fee will be levied as per office order No. IMC10.07/Adm Relief/URD/Adm4/B-1020 Mumbai Dated 18 April, 2007, which will be as below:‑
“For dealers who have not obtained Registration Certificate immediately after they became liable forregistration but obtain a Registration Certificate under the MVAT Act after remaining unregistered for some time.
The compounding fee should not desirably less than, Rs. 5000 plus 0.5% of the gross sales tax liability, arising during unregistered period, for each month of delay in obtaining the Registration under the relevant Act.”
g) Once the developer submits his application for administrative relief along with compounding fee and pays taxes with returns for unregistered period, the concerned Joint Commissioner shall pass the order granting administrative relief within two days. There will be no need to give hearing to the dealer.
h) Considering the expected workload, more Joint Commissioners are entrusted with the powers of grant of administrative relief in Mumbai and Pune.
i) The registration officer while granting the registration to these dealers should set the periodicity of their returns as quarterly.
j) Being a works contractor, the dealers should file their returns in form no. 233.
k) Needless to mention that the developers should upload all their returns along with tax, interest and late fee.
1) The developers who have still not obtained registration shall obtain registration on or before 16th August, 2012. In such cases penalty under sub-section (2A) of section 29 of MVAT Act will not be attracted.
m) Those developers who had obtained registration and paid taxes for period after 01-04-2010 should apply for administrative relief for previous period and file returns for previous periods on or before 31st August, 2012.
n) The department will initiate penal actions against developers who will not obtained registration and file the returns within above time.
o) If the Audit Report u/s 61 in Form No. 704 for all the periods up to 201112 are filed on or before 30th November, 2012, then the penalty u/s 61 (2) will not be levied.
3. To facilitate these dealers and to resolve their queries, dedicated help desks have been opened at following offices of the Sales Tax Department, viz, Mumbai,Thane, Pune, Kolhapur, Nasik, Nagpur and Aurangabad. The name of the help desk officers and their telephone
numbers are given below.
| LOCATION | NAME | CONTACT NUMBERS | |
| Mumbai | Shri S. K. Nikam | 23760565 | nika...@mahavat.gov.in |
| Mumbai | Shri D. S. Shinde | 23760562 | shin...@mahavat.gov. in |
| Thane | Shri Y. A. Lokare | 25496231 9892824521 | loka...@mahavat.gov.in |
| Pune | Shri R. G. BANKHELE | 26609218 9822006188 | bankh...@gmail.com |
|
Kolhapur | Shrimati S. V. Miskin | 2663932 / 42 | misk...@mahavat.gov.in |
| Nasik | Shrimati S. D. Thorat | 2335173 9421689354 | thor...@mahavat.gov.in |
| Nagpur | Shri S. V. Lahane | 9823999375 |
laha...@mahavat.gov.in |
|
Aurangabad | Shri R. V. Darke | 9850298652 | dara...@gmail.com |
4. A Frequently Asked Questions [FAQs] regarding the tax liability and other issues raised by MCHI is annexed with this trade circular.
5. In case of difficulties, the dealers are requested to approach the concerned Joint Commissioner of Sales Tax.
6. This circular cannot be made use of for legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.
You are requested to bring the contents of this circular to the notice of all the members of your association.
(Sanjay Bhatia)
Commissioner of Sales Tax
Commissioner of Sales Tax
Maharashtra State, Mumbai.
FREQUENTLY ASKED QUESTIONS [FAQs] ON TAXATION OF DEVELOPERS
1. Admitting while not accepting that the State of Maharashtra can levy tax on such a transaction, will our members get the credit of input tax paid while effecting purchases of materials like cement, iron 86 steel etc. required to be used in the
Construction project. The members would pay the tax under the MVAT Act as the applicable rate of 4% or 12.5% depending on the material required to be used?
Ans: Yes, they will get input tax credit, if they paid the taxes u/r 58 or u/s 42 (3).
2. In our life of industry, the practice is that an Agreement to Sell is prepared much in advance at the time when a prospective buyer book the accommodation in a building under construction and the developer concerned undertake to give possession of the accommodation so booked after obtaining completion certificate with the promised Position, we would like to know as to at what point of time the VAT under the amended law would be payable?
Ans: Taxability arises on agreement. Tax is levied as and when the installments become due and payable or are received, whichever is earlier.
3.Whether the levy of VAT on agreement for under construction flats/ shops etc. is covered with in the amended definition of Works Contract? Is there any scope for escaping this levy?
Ans: Yes. It is covered. No Scope for escapement.
4.What is the rate of tax under VAT Act applicable for agreement to sell under construction flats?Ans: Tax rates would be those which apply to the goods in which property is transferred.
5. What is the effective date from which the VAT will be applicable? -
Ans: The date of amendment i.e. 20 June, 2006.
6.The agreement to sell the flat was executed before 20.06.2006 and the building was under construction and possession is given after 20.06.2006. Whether the VAT will apply in Such case because the agreements were executed prior to 20.06.2006? If yes how the sale value will be determined for calculation of VAT? Whether the amount received prior to 20.06.2006 will be exempt from VAT? .
Ans: Yes. VAT will apply. It will be levied on value received or receivable after 20th June, 2006.
7. Many times mere advances are received and agreement is executed much later. What will be the point of liability whether at the time of receiving the advances or at the time of execution of the agreement or thereafter on possession?
Ans: Tax will be levied from the date of the agreement. The amount of advance, as and when it is adjusted towards the agreement amount, will be taxed.
8.The builders receive non-refundable deposits and other charges under the agreement such as electricity deposit, water charges, legal charges, development charges etc. Whether such receipts will also form part of sale price for VAT?
Ans: The amounts which are received as deposits will be a deduction to the extent such amounts are actually paid to other authorities.
9. In the under construction flats the amounts are received in installments. How the sale price will be determined? Whether the actual receipts will be taken as sales or the whole of the agreement value will be taken as sale at the time of execution of the agreement, even though the amount is yet to be received?
Ans: Received or receivable. Receivable means due and payable.
10.Can the VAT applicable in above cases be collected by raising a debit note or the same should be mentioned in the agreement itself? Whether VAT should be collected on each installment or at one go upon execution of the agreement?
Ans: Yes. It can be collected by raising a debit note. Specific mention in the agreement is a choice of the contracting parties. It should be collected as and when the instalment becomes due.
11.What will be the amount of set off available in such cases i.e. full set off of VAT paid on purchases or part of that?
Ans: Purchases made on or after 20th June, 2006, will be eligible for set off subject to rules.
12. Whether any interest or penalty will be attracted for non registration with sales tax authorities under VAT and no submission of VAT returns for the transactions executed for sale of flats/ shops under construction between intervening period i.e. 20.06.2006 to 07.02.2007?
Ans: Yes.
13.What will be VAT the implications where mere advances are received from buyers and agreement for sale is not executed with the buyer?
Ans: There is no tax liability.
14. If composition scheme is not opted then what is the rate of tax and how the sales price will be determined? What are the deductions permissible like labour charges, profit margin etc. In such cases how the set off will be worked out?
Ans: As per rule 58. Set off is related to purchases and not sales.
15. A Builder may construct more than one project, in such case, whether different calculation method for different project can be applied?
Ans: Yes, he may adopt different method for each project, but he is not allowed to change the method till the completion of that project.
16. What are the various options available to the developers for disclosing tax liability?
Ans: Developers can discharge their tax liability by any of the following option:-
From 20.06.2006 to 31.03.2010
1. Composition Scheme U/s 42 (3)- Under this scheme developer has to pay 5% tax on the agreement value. Land deduction is not available. Input tax credit is available subject to the reduction of 4 per cent.
2. Actual Expense Method U/r 58- Under rule 58, the deduction of Labour 86 service charges is available on actual basis. Land deduction is also available. Set-off will be calculated subject to the condition u/r 53 and 54.
2. Actual Expense Method U/r 58- Under rule 58, the deduction of Labour 86 service charges is available on actual basis. Land deduction is also available. Set-off will be calculated subject to the condition u/r 53 and 54.
3. Standard Deduction Method U/r 58- Under rule 58, the deduction of land cost will be allowed. Thereafter 30% standard deduction from remaining amount will be available as per proviso to sub-rule 1. Set-off will be calculated subject to the condition u/r 53 and 54.
After 01.04.2010
The developers can opt for fourth option also, under this option u/s 42 (3A), developer has to pay 1% tax on agreement value. No land deduction and input tax credit is available.
Needless to mention that, the developers will be required to make the payment of interest according to the provisions of law.
Critical issues which may arise
1. Even though its immovable property it was constructed by movable things only.Hence every contractor,builder or construction companies have to pay VAT on the materials(movables) involved in the construction.If it was only a labour contract(materials given by the awardee) there is no liability of VAT.
2. Selling flat is immovable property. Maharashtra VAT Act, Clearly states that VAT is applicable on the Movable Goods. hence basically Flat is Immovable property then Why to adopt Deeming provision of the Act or composition scheme.
3.They had to pay VAT on the materials at approriate rates or under composition tax on the total value of the contract .For the labour charges they had to pay service tax
4.under works contract there should be proportion for service and materials used. and on materials used% vat should be payable.
5. Tax to be paid on Sale Value or Stamp Duty whichever is higher. It may create scope for investigation of Cost during Assessment of Cases.
6.No set off and No C Forms and No 409(sub contractor to pay tax)
7. Agreement for sale executed under the act was a conveyance, as it conveys right, title and interest in the flat to the purchaser. Therefore it was not possible to accept that the contract involving sale of a flat under MOFA was not a works contract. This was the main issue challanged in court of Law.
8.The indivisible works contracts were not covered under the State Sales tax Acts since works contracts were not normal sales. The Supreme Court confirmed this legal status in its land mark judgment in the case of Gammon & Dunkerely (9 STC 353). Due to this legal status, the states were denied the levy of Sales Tax on the indivisible works contracts. Such contractors
were outside the purview of sales tax laws.
9. Judgement of Uttar Pradesh (Referring K. RAHEJA REFERRED TO LARGER BENCH cannot be accepted as a universally ):-We may also point out that, if contention of the petitioners is to be accepted, it will lead to various complications, anomalies and it will give a handle for avoiding payment of Stamp Duty on sale transactions by making payment before hand and executing the property subsequently. Parties get no edge to argue that since they had already paid certain amounts, it will invariably mean vesting transfer of right or ownership in a given property, cannot be accepted as a universally correct proposition in law. It will result preposterous.” This decision became final and is a binding precedent. It is worthwhile to reproduce an important. Government order no. ka.Ni.-5-4122/11-2000-500(9)/99 dated 27 July 2000 issued
the Principal Secretary Tax & Registration, Uttar Pradesh.
10. Real estate builders want tax exemption for retrospective amendment and may accept tax levy from current year. Builders blame Maharashtra for stalling affordable housing. The Builders have to pay vat @ 5% on the flat sold from June 2006 and also what are the deductions possible for the same. Is it possible to calculate before 16 th Aug 2012 and pay tax before 31-8-2012. The builder has to pay this tax from his pocket as under.
11. Works Contract — TDS : S. 31 of the MVAT Act provides that the Commissioner may, by notification, require any dealer or person or class of dealers or persons (hereafter referred as ‘the employer’) to deduct tax on such amount payable on the purchases effected by them, as may be notified. All such employers shall have to :
(a) Take a Tax Deduction Number (Works Contract) from the Sales Tax Department. Application to be made, in Form 401, within three months from the day he becomes liable to deduct TDS.
(b) Deduct tax, at prescribed rate, from the amount paid or payable to a contractor during a given period.
(c) Deposit the amount so deducted with the Govt. treasury within 10 days from the end of month in which such tax is deducted or is required to be deducted.
(d) Issue a certificate of deduction of tax, immediately, in Form 402.
(e) Submit monthly (quarterly) statement of tax deducted at source, in respect of each of such contractors, to the respective prescribed officer, in Form 403, within 20 days from the end of the month.
(f) Maintain necessary records in prescribed format, Form 404.
(g) File an annual return of TDS, in Form 405, within 3 months from the end of the year.
(h) Attend and produce records before the assessing authority as and when asked to do so.
Notes :
1. A contractor, awarding sub-contracts, is not required to deduct TDS from such sub-contractor.
2. TDS provisions are not applicable in respect of works contract liable to tax under the CST Act.
3. TDS not required to be deducted where the amount or the aggregate of the amount payable to a dealer by such employer is less than Rs.5 lakh during any year.
Employers notified for the purposes of TDS :
1. The Central Government and any State Government,
2. All Industrial, Commercial or Trading undertakings, Company or Corporation of the Central Government or of any State Government, whether set up under any special law or not, and a Port Trust set up under the Major Ports Act, 1963,
3. A Company registered under the Companies Act, 1956,
4. A local authority, including a Municipal Corporation, Municipal Council, Zilla Parishad, and Cantonment Board,
5. A Co-operative Society including a Co-operative Housing Society registered under the Maharashtra Co-operative Societies Act, 1960,
6. A Registered Dealer under the Maharashtra Value Added Tax Act, 2002.
7. An Insurance or Finance Corporation or Company; and any Bank included in the Second Schedule to the Reserve Bank of India Act, 1934, and any Scheduled Bank recognised by the Reserve Bank of India.
8. Trusts, whether public or private.
Rate of TDS :
The notified employers are required to deduct TDS, from the amount payable to a contractor @ 2%, if the contractor is a Registered Dealer, otherwise @ 4%.
References
--
JOSHI KULKARNI & CO.
LOCATION :- AURANGABAD , MUMBAI, PUNE , NANDED
CONTACT 92253 06814 EMAIL giris...@joshikulkarni.co.in
To get ca_updates SMS
Send SMS to 98708 07070 as under
on ca_updates
you will get SMS of Success
If your cell is in DND, just to get sms of ca_updates, send SMS to 1909 as under
START 6
Reply all
Reply to author
Forward
0 new messages