MVAT - WORKS CONTRACT - TDS PROVISIONS

Section 31 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:

1. Deduct tax, at prescribed rate, from the amount paid or payable to a contractor during a given period.
2. Deposit the amount so deducted with the Govt. treasury within 21 days from the end of month in which such tax deducted or required to be deducted. [Challan Form MTR-6, w.e.f. 21-5-2013, earlier Form 210].
3. Issue a certificate of deduction of tax, immediately, in Form 402.
4. Maintain necessary records in prescribed format, Form 404.
5. Submit Annual Return within three months from the end of year to which such return relates i.e. by 30th June of next financial year. This return is now e-return (Form 424) w.e.f. 21st May, 2013 (earlier the employer/s were required to submit manual return in Form 405 to the jurisdictional Joint Commissioner of Sales Tax).

Notes:

• The TDS provisions are applicable only to specified employers.
• A contractor, awarding sub-contracts, is not required to deduct TDS from such sub-contractor/s.
• TDS provisions are not applicable in respect of works contract liable to tax under the CST Act.
• 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 lakhs during the financial year.
• TDS is required to be deducted on the amount paid/ payable in respect of works contract. Thus TDS not to be deducted on taxes (whether VAT or service tax) charged separately by the contractor.
• No TDS on advance payments, however TDS on such advances to be deducted at the time when such advance is adjusted towards the amount payable.
• A contractor can apply in Form 410 for a certificate of no deduction of tax at source if the contract is not a works contract.