Transcript Contractee - WordPress.com

Work Contract Tax
SECTION 36A
Introduction
In order to constitute a works contract, two
basic cumulative conditions need to be
satisfied,
i. there must be transfer of property goods
involved in the execution of specified
works contract.
ii. such transfer is leviable to tax as sale of
goods under relevant Sales tax/ VAT laws.
Who is liable to deduct WCT?
• Contractee :Every person other than individual
& HUF responsible for making payment to
contractor in relation to work contract.
• Contractor : Every contractor whether
individual or HUF or any other
person,responsible for making payment to sub
contractor in pursuance of work contract.
When to deduct WCT?
Contractee : Earlier of credit in books or at
the time of payment.
Contractor : At the time of payment to subcontractor for transfer of property in goods.
Rates of WCT
Nature of Deductee
Rate of WCT
If the contractor or Sub-Contractor as the
case may be, to whom payment is made is
registered under DVAT
4%
If the contractor or Sub-Contractor as the
case may be, to whom payment is made is
not registered under DVAT
6%
TAN(Tax Deduction Account
Number)
• Person responsible for making deduction
u/s 36A shall apply for TAN in form DVAT
44 within 7 days from date on which tax
was deducted.
• TAN shall be issued in Form DVAT 45
Basic Exemption
• Contracts for a value upto Rs 20,000
or such amount as may be notified by
commisioner are exempt from
deduction of WCT.
WCT on Advance Payment
• WCT cannot be deducted by the
contractee or contractor as the case may
be, on the advance payment to
contractor/sub-contractor.( as provisions of
WCT doesnot apply to all payments but
apply to those payments which are for
discharge of any liability)
Deposit of WCT
• WCT shall be deposited before the
expiry of 15 days following the month
in which deduction is made, in challan
in form DVAT 20.
• It shall be deposited in electronic form
by all registered dealers &
contractees.
WCT Certificate
• It shall be issued by deductor u/s 36A(5) &
36A(5A) of DVAT Act read with rule 59(2).
• Certificate shall be issued in Form DVAT
43.
• Copy of challan for payment of tax by
contractee shall also be attached with
WCT certificate.
• Certificate shall be issued in
quadruplicate.
• First & Second copy shall be furnished to
contractor.
• Third copy shall be attached by deductor
along with WCT return with proof of
payment in challan form DVAT 20.
• Fourth shall be retained by deductor for
his records.
Time limit to furnish certificate
• Certificate shall be furnished in duplicate
to contractor within 7 days from date of
deposit of WCT.[Rule 59(2)]
• In case of default in issue of certificate
within the prescribed time, defaulter shall
be liable to a penalty of Rs 100 per day of
default.
WCT Return
WCt return shall be filed by deductor
 in form DVAT 48
Within 28 days from end of quarter in
which tax has been deducted.
Default : In case of default in filing of
return in prescribed time, defaulter shall be
liable to a penalty of Rs. 200 per day of
default but doesn't exceeds Rs. 20,000.
Penalty for non-deduction or non-payment of
WCT [Sec 36A(8)]
• If any person fails to deduct or after making deduction
fails to deposit with account of Govt. shall be liable for
imposition of penalty.
Amount of Penalty
A sum not exceeding twice the amount deductible
besides the tax deductible but not so deducted or if
deducted,not so deposited. But this penalty will not
discharge the deductor from liability for deduction of
WCT and even after payment of penalty,he is still
required to discharge the obligation for deduction and
payment of WCT.
Interest for non-deduction or non-payment of
WCT [Sec 36A(9)]
• If any person fails to deduct or after making deduction
fails to deposit with account of Govt. shall be liable for
interest without prejudice to provisions u/s 36A(8).
Rate of Interest
Defaulter is liable for simple interest at the rate of 15%
p.a on the amount deductible but not so deducted, and if
deducted,not so deposited. It shall be calculated from
the date on which tax was deductible to the date on
which such amount is actually deposited.