1% Scheme for De­vel­op­ers in Haryana

Accommodation Times - - Front Page - CA Ankit Gul­gu­lia (Jain) B.COM (H), CA, CIFRS, CBV, LLB ankit­gul­gu­lia@gmail.com

The much awaited draft no­ti­fi­ca­tion on Com­po­si­tion scheme for De­vel­op­ers and Works con­trac­tors have been re­leased by state gov­ern­ment on 5th July, 2014. The same has fol­lowed the ear­lier no­ti­fi­ca­tion in­creas­ing the WCT rate to 5% in Haryana as de­cided in cabi­net meet­ings un­der the chair­man­ship of Hon’ble Chief Min­is­ter.

(Note: - This draft no­ti­fi­ca­tion i. e. No. Web 6/ H. A. 6/ 2003/ S.60/2014 dated 5th July, 2014 and con­tents here­un­der are not effective as on as the same is a draft no­ti­fi­ca­tion and put up for com­ments / ob­jec­tions by stake­holder)

The draft no­ti­fi­ca­tion es­sen­tially is char­ac­terised by four broad spec­trums, th­ese are:

a) In­ser­tion of Rule 2(mmmm) in the HVAT Rules which shall gov­ern and in­tro­duce the con­cept of ‘ De­vel­oper’ as a sep­a­rate cat­e­gory from Works con­trac­tor

b) Re­vised Com­po­si­tion scheme for works con­trac­tors (other than De­vel­op­ers) pur­suant to Rule 49.

c) New Com­po­si­tion scheme for De­vel­op­ers by in­ser­tion of new Rule 49A

d) Amnesty for De­vel­op­ers i.e. the pre­scribed de­vel­op­ers shall be el­i­gi­ble to opt for Rule 49A ret­ro­spec­tively from 1st April, 2007. ‘De­vel­oper’ - Rule 2(mmmm)

` De­vel­oper' means a per­son who is en­gaged in and un­der­takes the con­struc­tion of civil struc­tures, flats, dwelling units, build­ings, premises, com­plexes, com­mer­cial or oth­er­wise, whether wholly or partly (ei­ther him­self or through an au­tho­rized per­son) for sale and trans­fers them in pur­suance of an agree­ment along with land or in­ter­est un­der­ly­ing the land to a buyer, where the value of land or in­ter­est un­der­ly­ing the land is in­cluded in the to­tal con­sid­er­a­tion re­ceived or re­ceiv­able;"

Re­vised Com­po­si­tion Scheme for Works Con­trac­tors (Other than De­vel­op­ers) – Rule 49

1) A con­trac­tor other than de­vel­oper fall­ing un­der rule 49A li­able to pay tax un­der the Act, may, in re­spect of works 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 cal­cu­lated at five per cent (Au­thor’s Com­ment :- Rate in­creased from 4% - Effective rate post sur­charge shall be 5.25%) of the to­tal valu­able con­sid­er­a­tion re­ceiv­able for the ex­e­cu­tion of the con­tract, by mak­ing an ap­pli­ca­tion to ap­pro­pri­ate as­sess­ing au­thor­ity within 30 days of award of con­tract to him con­tain­ing the fol­low­ing par­tic­u­lars

a. Name of the ap­pli­cant con­trac­tor

b. TIN (Ap­pend ap­pli­ca­tion for reg­is­tra­tion, if not reg­is­tered or not ap­plied for reg­is­tra­tion)

c. Name of the con­tractee

d. Date of award of the con­tract

e. Place of ex­e­cu­tion of the con­tract

f. To­tal cost of the con­tract

g. Pe­riod of ex­e­cu­tion h. and ap­pend­ing there­with a copy of the con­tract or such part thereof as re­lates to to­tal cost and pay­ments

2) 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 and such con­trac­tor whose ap­pli­ca­tion is al­lowed shall be called lump sum con­trac­tor.

3) The lump sum con­trac­tor shall be li­able to make pay­ment of lump sum monthly cal­cu­lated at five per cent of the pay­ments re­ceived or re­ceiv­able by him dur­ing the month for ex­e­cu­tion of the con­tract. The pay­ment of lump sum so cal­cu­lated shall be made within twenty one days fol­low­ing the close of the month af­ter de­duct­ing there from the amount paid by the con­tractee on be­half of the con­trac­tor un­der sec­tion 24 for ‘that’ month. 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.

4) 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, if any, due from him ac­cord­ing to such re­turn af­ter ad­just­ing the amount paid un­der sub rule (3).

5) 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 clause (a) of sub- sec­tion ( 3) of sec­tion 7 and for this pur­pose he shall be deemed to be a man­u­fac­turer.

6) The lump sum con­trac­tor shall main­tain com­plete ac­count of, dec­la­ra­tions in Cen­tral form C and Form VAT-D1 used by him and, the uti­liza­tion 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.

7) 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.

8) 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 scheme of pay­ment of lump sum in lieu of tax payable un­der the Act. 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 con­tract(s) he shall con­tinue to pay lump sum in lieu of tax payable un­der the Act till the com­ple­tion of each of such con­tract(s).

9) 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 fif­teen 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 con­tract(s) there­after he shall be li­able to pay tax as a con­trac­tor not be­ing a lump sum con­trac­tor.

10) A lump sum con­trac­tor shall 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.

11) The Ex­cise & Tax­a­tion Com­mis­sioner shall be com­pe­tent to is­sue the de­tailed guide­lines, spec­ify the pro­ce­dure and the forms etc for the pur­pose of avail­ing, com­pli­ance and mon­i­tor­ing of the above scheme.

New Com­po­si­tion Scheme for De­vel­op­ers (Rule 49A) – Such De­vel­oper re­ferred as

Com­po­si­tion De­vel­oper A) Who can Opt this Scheme

A De­vel­oper li­able to pay tax un­der the Act, and duly reg­is­tered may pay, as an op­tion, in lieu of tax payable by him un­der the Act, by way of com­po­si­tion a lump sum tax.

B) Rate of Tax & Val­u­a­tion

Tax shall be cal­cu­lated at the com­pounded lump sum rate of one per­cent of en­tire ag­gre­gate amount spec­i­fied in the agree­ment or value spec­i­fied for the pur­pose of stamp duty, which­ever is higher, in re­spect of the said agree­ment. The De­vel­oper opt­ing for this scheme here-in-af­ter shall be re­ferred to as the com­po­si­tion de­vel­oper.

(Note: - The draft no­ti­fi­ca­tion is silent on the point of tax­a­tion)

C) Other Modal­i­ties of the Scheme

a. The com­po­si­tion de­vel­oper opt­ing for com­po­si­tion un­der this scheme, shall not pur­chase or re­ceive goods from any place out­side Haryana to be used in the ex­e­cu­tion of the con­tract at any time dur­ing the pe­riod for which the com­po­si­tion re­mains in force un­der this Scheme

b. Where the goods are pur­chased or re­ceived in course of in­ter­state trade and com­merce or trans­ferred from other states or im­ported from out of In­dia have been used in the ex­e­cu­tion of the con­tract, then the com­po­si­tion de­vel­oper shall pay the tax on their pur­chase price at the rate/s ap­pli­ca­ble on the sale of such goods in the State along with in­ter­est as ap­pli­ca­ble un­der the Act and such tax shall not be ad­justable to­wards his com­po­si­tion tax li­a­bil­ity;

c. Com­po­si­tion dealer shall be treated as non-vat dealer and not el­i­gi­ble to claim in­put tax credit

un­der sec­tion 8 of the Act;

d. Com­po­si­tion dealer shall not col­lect any amount by way of tax un­der the Act;

e. Com­po­si­tion dealer shall shall not is­sue `Tax In­voices'

f. Com­po­si­tion dealer shall re­tain the orig­i­nals of all tax in­voices and all the re­tail in­voices for all his pur­chases

g. Com­po­si­tion dealer shall not be en­ti­tled for any re­fund.

D) Tax pe­riod

The tax pe­riod for the com­po­si­tion de­vel­oper shall be monthly and the pay­ment of lump sum in lieu of tax shall be paid by the com­po­si­tion de­vel­oper within 15 days of the close of the month. Pro­vided that if a com­po­si­tion de­vel­oper fails to make the pay­ment of tax in time un­der this scheme, then he shall be li­able to pay in­ter­est as per the pro­vi­sion of sub­sec­tion

(6) of sec­tion 14 of the Act

E) No Ad­just­ment of amount paid to Con­trac­tors / Sub-Con­trac­tor Where the com­po­si­tion de­vel­oper awards any por­tion of his con­tract to a con­trac­tor or sub­con­trac­tor, such com­po­si­tion de­vel­oper shall not be el­i­gi­ble for any de­duc­tion on ac­count of any tax paid by the con­trac­tor or the sub con­trac­tor un­der the Act.

Amnesty for De­vel­op­ers

A) Who Can Opt for and Since When?

A com­po­si­tion de­vel­oper, whose as­sess­ment has not achieved fi­nal­ity, may opt for this scheme with ef­fect from 1st April, 2007.

B) Con­di­tions for Opt­ing

• To With­draw all the ap­peals - The com­po­si­tion de­vel­oper shall cal­cu­late his tax li­a­bil­ity ac­cord­ing to the rates pre­scribed here-in-above on the pre­scribed­turnover and shall meet and pay his tax li­a­bil­ity vol­un­tar­ily along with in­ter­est and ap­ply to the con­cerned as­sess­ing au­thor­ity declar­ing his intention to opt the scheme ret­ro­spec­tively and once the as­sess­ing au­thor­ity con­firms the ac­cep­tance of his op­tion with ret­ro­spec­tive date, the dealer shall hence­forth with­draw all his ap­peals/re­vi­sion/re­view/ pe­ti­tions pend­ing be­fore the ap­pro­pri­ate au­thor­i­ties or courts and in­ti­mate the same to the as­sess­ing au­thor­ity si­mul­ta­ne­ously.

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