Effective from 1st April 2013.
·
Applicability on dealers ENGAGED EXCLUSIVELY in
carrying out works contracts
in Delhi
- Composition
dealers under this notification SHALL NOT BE ELIGIBLE for the general composition
scheme provided by Section 16(1) to 16(10) of the Act.
Different rates under
different schemes for different type/nature of Works contract has been suggested
under this Model.
ELIGIBILITY FOR SCHEMES:
SCHEME A:
A registered dealer opting to pay composition tax
under this Scheme shall:
(i)
not
purchase/sell or procure/supply goods from/to any place outside Delhi at any
time during the period for which he opts to avail this Scheme
* He may procure his own Plant & Machinery and
Equipments from outside Delhi, MEANT
EXCLUSIVELY FOR USE IN EXECUTION OF THE WORKS CONTRACT BY HIM.
SCHEME B:
A registered dealer opting to pay composition tax
under this Scheme shall
(i)
Be entitled to make purchases of goods required for the execution of the
contract under this Scheme in the course of inter-State trade
or commerce on the basis of his certificate of registration against
declaration in Form-C.
OR
(ii)
By way of inward transfer of stocks from other States
against Form-F
OR
(iii)
By way of imports from other countries solely for the
purposes of utilizing the same in the execution of works contract in
Delhi only. The dealer shall use the material/ goods imported or procured from
outside Delhi strictly for use in execution of the works
contract transactions.
General Conditions for both the schemes:-
The
composition dealer opting for composition under this notification shall:
a)
NOT purchase or procure goods, other than those specified in the First
Schedule appended to the Act, within Delhi, from a person who is not registered
under the Act, except to the extent of 2% of his total purchase turnover during the year or Rs. 25 lakhs, whichever
is lower;
b)
NOT be ELIGIBLE to CLAIM TAX CREDIT under
section 9 and/ or section 15 of the Act;
c)
NOT compute his net tax under section 11 of the Act;
d)
NOT collect any amount by way of tax under the Act;
e)
NOT be entitled to issue ‘Tax Invoices’;
f)
continue
to retain the originals of all tax invoices and all the retail invoices for all
his purchases and copies of all retail invoices issued by him as required under
section 48 of the Act;
g)
Maintain
separate records of all the purchases made within Delhi, or in the course of
inter-State trade or commerce and by way of transfer of
stock or from outside India;
h)
issue
only Retail Invoices, as per provisions of the Act and the Delhi Value Added
Tax Rules, 2005 (hereinafter called ‘the Rules’);
i)
BE ELIGIBLE to CLAIM SET OFF OF TDS only if on the date of filing of return,
he is in possession of original TDS Certificate issued to him by the person
making the deductions; and
j)
NOT ENTITLED for refund before his assessment is made under section 32 of the Act.
FEW RELEVANT POINTS
- A
dealer, who opts to pay composition tax under
the notification and are liable to tax at
different rates under this notification, shall pay tax according
to the rate applicable to each of such contracts.
·
The
TAX PERIOD for the composition
dealer shall be a QUARTER, unless
otherwise prescribed by the Commissioner for a dealer or class of dealers.
However, the tax due shall be paid by the composition dealer ON MONTHLY BASIS, WITHIN 21 DAYS OF THE END
OF THE MONTH.
- In
case of Failure to comply, provisions of DVAT shall apply as if no
composition scheme applicable and Input tax credit on Opening
Stock shall be available.
INTIMATION TO
CONTRACTEE & TDS (WCT)
Dealer who opts to pay Tax under Composition Scheme
shall make an application to the contractee/ awarder, not being an
individual or a Hindu Undivided Family, in which he authorizing it to deduct
tax at source at the rate which may be applicable to the contracts for which
composition is opted by the dealer. The
contractor shall not be able to claim benefit of the TDS in his return unless
the contractee/ awarder has deposited the amount in the appropriate Government
Treasury. The Contractor would be able to claim the benefit of TDS on the basis
of the TDS Certificate issued by the Contractor in a prescribed form in which
the details of challan deposited is also mentioned.
FORM C BENEFIT NOT AVAILABLE ON SALE OF
PLANT & MACHINERY
A
composition dealer SHALL NOT make
any SALE OF CAPITAL ASSET including
Plant & Machinery and Equipments, scrap, surplus, waste or discarded
material OUTSIDE DELHI AGAINST CENTRAL
STATUTORY FORMS & shall pay Tax
at the rates specified in section 4of the Act, as if he has not opted for any
scheme.
NO IMPLICATIONS FOR GOODS SUPPLIED BY CONTRACTEE –
SUBJECT TO CONDITIONS
The
Composition dealer is not required to pay any tax on the VALUE OF GOODS SUPPLIED BY THE CONTRACTEE to the Contractor in the
execution of Works Contract where the ownership of such goods remains with the
Contractee. The amount representing the
value of the goods supplied by the contractee to the contractor does not form
part of the contract and is not deductible from the amount payable to the
contractor by the contractee for the execution of the works contract.
NO
TDS SHALL BE DEDUCTED BY THE CONTRACTEE ON THE VALUE OF GOODS SUPPLIED BY THE
CONTRACTOR.
RATES
APPLICABLE
|
S.No
|
Type
of Works Contract
|
Rates under Scheme A
|
Rates under Scheme B
|
|
1.
|
All Residual Works Contract not covered under 2 & 3
below
|
3%
|
6%
|
|
2.
|
Construction WC Dealers
Construction, of a complex, building, civil
structure or a part thereof, including a residential unit or a complex
or building, for sale whether wholly or partly, to a buyer before
construction is complete, where the value of land is included in the total
consideration.
Note: Contracts
where the entire consideration is received after issuance of completion
certificate by the competent authority are excluded here
|
1%
|
3%
|
|
3.
|
Every registered dealer engaged
in
(i) Printing and/or book-binding.
(ii) Textile processing such as
dying, fabrication, tailoring, embroidery and other similar activities.
(iii) Electro plating, electro
galvanizing, anodizing, powder coating and other similar activities.
(iv) Re-treading of old tyres
|
2%
|
3%
|
*Rate as % of Turnover
Turnover for above purpose shall include total consideration of contract
including labour charges (service portion) etc & in case on construction
dealers shall also include the value of Land.
Modalities
of Scheme
·
The
dealer can opt for this scheme by filing an application in Form WC 01 along
with his registration application in Form DVAT 04.
- The
application is to be filed within 30 days from First day of FY of opting
scheme or applicability of notification as applicable.
- Existing
Dealers opting for such scheme shall pay tax on opening stock as per
section 4 of DVAT, 2004. The WC-01 shall be accompanied with Form SS-01
detailing the stock, tax paid.
- If
due to some reason the dealer fails to comply, the input tax
credit of opening stock shall be provided to the dealers.
- Scheme
shall be eligible for financial year except where dealer defaults in
furnishing return within due date for two consecutive tax periods. In such
a case, the scheme within deemed redundant and the dealer shall be required
to file WC-02 within 7 days of such default.
- Once
a dealer has opted to pay tax under this scheme, he shall, not be eligible
to withdraw his option before the end of the financial year.
Registered
Sub-contractor – Benefits/Exemption
Where the composition dealer has made any payment
to a registered sub-contractor, who also opts for composition, for the
execution of works contract, whether wholly or partly, the composition dealer,
shall issue a certificate to such sub-contractor, in Form CC 01.
Such sub-contractor shall be eligible to deduct from his turnover liable to be
taxed under this scheme, the amount mentioned in such certificate by enclosing
it with his return. Such amount shall not constitute part of the turnover in
Form DVAT 17 of such sub-contractor. The contractor shall
not deduct TDS from payments made to such sub-contractors in respect
of the turnover covered by the certificate.
Contributed by Tanya Gagneja
