Works conct tax - tds- provision
This query is : Resolved
05 November 2012
Dear Sirs,
Kindly enlighten into the following query & repply accordengly .
ABC company Ltd given work of civil construction & machine foundation etc of Factory building to LMN Co Ltd. Lmn Co Ltd opted for Composition schm under Maha Vat. LMN Co Ltd given this work to Xyz co to execute job,
LMN co Ltd raising bill to client ie. ABC co Ltd & charging WCT @ 5% on the bill.Abc co ltd deducting wct Tds @ 2% from LMN co, Now I want to know from expert that what is liability of contractor ie LMN co ltd & Sub Contractor Xyz co with each other .Whether WCT Tds is allicable ,is any forms are prescribed ?,
Kindly enlighten into the following query & repply accordengly .
ABC company Ltd given work of civil construction & machine foundation etc of Factory building to LMN Co Ltd. Lmn Co Ltd opted for Composition schm under Maha Vat. LMN Co Ltd given this work to Xyz co to execute job,
LMN co Ltd raising bill to client ie. ABC co Ltd & charging WCT @ 5% on the bill.Abc co ltd deducting wct Tds @ 2% from LMN co, Now I want to know from expert that what is liability of contractor ie LMN co ltd & Sub Contractor Xyz co with each other .Whether WCT Tds is allicable ,is any forms are prescribed ?,
06 November 2012
Mr P Harish,
Here ,as you say, ABC awards a contract to LMN, who in turn,gives a contract to XYZ.LMN charges 5% composition tax to ABC and ABC makes a tds of 2% while making payments to LMN.There is no mention about whether LMN also makes tds from payments to xyz. Howevver,LMN has to declare the collected tax in their returns and deduct 2% already paid to ABC as TDS.So,they will pay the balance of 3% to the Govt.XYZ issues bills to LMN and (suppose ) charges VAT in their bills.Now LMN can avail benifit in one of the ways i.e.either dedudct the entire turnover of sub-contractor XYZ from their TO or claim ITC of the tax paid on XYZ's bill. In many states onlythe first option is available. It means LMN should deduct the the sum of sub-contractor's payments from their bill issued to ABC and on the balance amount collect 5%.(5% of LMN price -XYZ price).
Declare thiese details in the return along with TDS paid and pay the balance or claim excess as refund.XYZ will file normal return and pay taxes as a contractor. If LMN makes tds follow the pattern stated above. TDS amount is to be deposited to govt along with challn in Form 210 and ABC has to issue a certificate of TDS made in Form 402 to LMN. ABC also has to maintain a register in Form 404 and report to JCCT of their division quarterly....MJK
Here ,as you say, ABC awards a contract to LMN, who in turn,gives a contract to XYZ.LMN charges 5% composition tax to ABC and ABC makes a tds of 2% while making payments to LMN.There is no mention about whether LMN also makes tds from payments to xyz. Howevver,LMN has to declare the collected tax in their returns and deduct 2% already paid to ABC as TDS.So,they will pay the balance of 3% to the Govt.XYZ issues bills to LMN and (suppose ) charges VAT in their bills.Now LMN can avail benifit in one of the ways i.e.either dedudct the entire turnover of sub-contractor XYZ from their TO or claim ITC of the tax paid on XYZ's bill. In many states onlythe first option is available. It means LMN should deduct the the sum of sub-contractor's payments from their bill issued to ABC and on the balance amount collect 5%.(5% of LMN price -XYZ price).
Declare thiese details in the return along with TDS paid and pay the balance or claim excess as refund.XYZ will file normal return and pay taxes as a contractor. If LMN makes tds follow the pattern stated above. TDS amount is to be deposited to govt along with challn in Form 210 and ABC has to issue a certificate of TDS made in Form 402 to LMN. ABC also has to maintain a register in Form 404 and report to JCCT of their division quarterly....MJK
08 November 2012
dear sir,
LMN co not deducting wct-tds of xyz co. since we read that tds no to made on paymnent made to sub-contractor ,Is any form is prescribed to not to deduct wct-tds, OR it is compulsory to main contractor ie LMN to deduct wct-tds from sub cont- ie xyz .
LMN co not deducting wct-tds of xyz co. since we read that tds no to made on paymnent made to sub-contractor ,Is any form is prescribed to not to deduct wct-tds, OR it is compulsory to main contractor ie LMN to deduct wct-tds from sub cont- ie xyz .
19 November 2012
I agree with the expert
19 November 2012
State and Cebtral Govts PSUs semi govt organisations(Civic bodies etc) and large industrial undertakings must make TDS from the subcontractors' payments. For others it is not mandatory.....MJK
05 December 2012
Under the provisions of Maharashtra Vat Act No statutory obligation to deduct the tax from payment to sub contractor.
Relevant declarations are prescribed from Form No. 406 to 409 under MVAT Rule, depending on tax liability discharged by contractor or sub contractor on value of sub-contract.
Relevant declarations are prescribed from Form No. 406 to 409 under MVAT Rule, depending on tax liability discharged by contractor or sub contractor on value of sub-contract.
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