- LUMP SUM SCHEME IN RESPECT OF CONTRACTORS.
Applicability
A contractor liable to pay tax under HVAT Act may, in respect of a work contract awarded to him for execution in the State, pay in lieu of tax payable by him under the Act on the transfer of property (whether as goods or in some other form) involved in the execution of the contract, a lump sum tax.
Rates
Lump sum tax shall be calculated at 4% of the total valuable consideration receivable for the execution of the contract.
Steps/ Conditions
Contractor opting this scheme shall make an application to the appropriate assessing authority within 30 days of the award of the contract to him, containing the following particulars:
Name of the applicant contractor;
TIN; (Append application for registration, if not registered or not applied for registration);
Name of the contractee;
Date of award of the contract;
Place of execution of the contract;
Total cost of the contract;
Period of execution,
and appending therewith a copy of the contract or such part thereof as relates to total cost and payments.
The application shall be signed by a person authorised to make an application for registration.
On receipt of the application, the assessing authority shall, after satisfying itself that the contents of the application are correct, allow the same.
The lump sum contractor shall be liable to make payment of lump sum quarterly calculated at 4% of the payments received or receivable by him during the quarter for execution of the contract. The payment of lump sum so calculated shall be made within 30 days following the close of the quarter after deducting therefrom the amount paid by the contractee on behalf of the contractor under section 24 for that quarter. The treasury receipt in proof of payment made and certificate(s) of tax deduction and payment obtained from the contractee shall be furnished with the quarterly return.
The lump sum contractor shall file returns at quarterly intervals in Form VAT-R6 within a month of the close of the quarter and shall pay lump sum tax due from him.
The lump sum contractor shall be entitled to make purchase of goods for use in execution of the contract both on the authority of declaration in Central form C as well as Form VAT-D1 prescribed under section 7(3)(a) and for this purpose he shall be deemed to be a manufacturer.
The lump sum contractor shall maintain complete account of, declarations in Central form C and Form VAT-D1 used by him and, the utilisation of the goods purchased on the authority of these forms. He shall be required to make use of declaration(s) in Form VAT-D3 for carrying goods of which he shall keep account. He shall also keep complete account of, payments receivable by him for the execution of the contract and, the payments actually received by him.
A lump sum contractor shall have to pay lump sum in respect of every works contract awarded to him after the award of the contract in respect of which he first elected to pay lump sum and he shall continue to pay tax in respect of contracts awarded before as if he is not a lump sum contractor.
Opt-Out
- A lump sum contractor may at any time by appearing before the appropriate assessing authority himself or through an authorised agent express in writing his intention to opt out of the. Such contractor in respect of the contracts awarded to him thereafter shall not be liable to pay lump sum in lieu of tax payable under the Act but in respect of the other contracts he shall continue to pay lump sum in lieu of tax payable under the Act till the completion of each of such contracts.
- A lump sum contractor may, when rate of lump sum is revised, opt out of the scheme of payment of lump sum in lieu of tax payable under the Act by appearing before the appropriate assessing authority himself or through an authorised agent within 90 days of such revision and expressing in writing his intention to opt out of the scheme of payment of lump sum.
Such contractor shall be liable to pay lump sum for the period before the revision in lump sum rate at the un-revised rate and in respect of transfer of property in any goods, whether as goods or in some other form, involved in the execution of the contracts thereafter he shall be liable to pay tax as a contractor not being a lump sum contractor.
In
india GST the problem of dual control is better addressed through a compounding scheme.
General principles/ conditions of this scheme
- Lump sum tax payable shall be deemed to be tax for the purpose of application of provisions relating to assessment, use of declarations and maintenance of record relating thereto, levy of interest, imposition of penalties for offences committed under the Act, and recovery.
- Once an option to pay lump sum has been exercised it shall not be withdrawn until
- the rate of lump sum is revised; or
- the rate of tax on goods which the lump sum dealer deal in are revised
- and the lump sum dealer makes an application within 15 days of the date of the publication of the notification that he does not wish to pay lump sum at the revised rate [exception under rule 49]
- A lump sum dealer shall not issue a tax invoice as defined in section 2(1)(zl).
- The input tax in respect of goods purchased by any dealer from a lump sum dealer shall be nil.
- Notwithstanding anything contained in this Chapter, the State Government may at any time withdraw the facility of making payment of lump sum in lieu of tax from anyone or more or all classes of dealers.
- No Surcharge under section 7A shall be applicable in this case.
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