Notification regarding Composition Scheme - 3(13)/Fin.(Rev-I)/2012-13/dsvi/180 - Delhi Value Added Tax

(TO BE PUBLISHED IN PART IV OF THE DELHI GAZETTE EXTRAORDINARY) GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI FINANCE (REVENUE-I) DEPARTMENT DELHI SACHIVALAYA, I.P. ESTATE, NEW DELHI-110002 No. 3(13)/Fin.(Rev-I)/2012-13/dsvi/180 Dated the 28-02-2013 NOTIFICATION Whereas the Lt. Governor of the National Capital Territory of Delhi is of the opinion that it is necessary in the interest of general public so to do. Now, therefore, in exercise of the powers conferred by sub-section (12) of section 16 of the Delhi Value Added Tax Act, 2004 (Delhi Act 3 of 2005) (hereinafter referred to as the Act ), the Lt. Governor of the National Capital Territory of Delhi, subject to the compliance of the conditions specified hereunder against the class(es) of dealers/ contractors specified in column (2) of the Table below, and other general and particular conditions as are specified in this notification, and in supersession of the Notifications No.F.3(78)Fin.(T E)2005-2006/1508-kha dated 17-3-2006 hereby, provides for the Composition Scheme for every registered dealer engaged exclusively in carrying out works contracts for cash or for deferred payment or for valuable consideration in Delhi as under, namely:- TABLE Category Nature of Works Contracts Composition Tax Rate [As percentage of entire turnover in relation to works contracts in Delhi] Scheme A Scheme B (1) (2) (3) (4) 1 Every registered dealer engaged in execution of works contracts of the following categories and incidental or ancillary activities in connection with or thereto: (A) Civil Contracts, such as, (i) Civil construction, improvement, modification, repair and maintenance, electrification, sanitary fittings, flooring, plastering, finishing, white washing, painting, polishing, interior decoration, etc. of any immovable property, including a building or a complex - residential or commercial. (ii) Water works and Sewerage works, including treatment plants, whether meant for individual houses/buildings/ complexes or for the general public. (iii) Fabrication fixing of shutters, doors, gates, windows, grills, furniture, fixtures, fitting outs and other similar contracts. (iv) Procurement, erection, fabrication, installation commissioning of any plant, machinery, equipment, transformers, lifts, elevators, escalators, weighing machines, air conditioners, air coolers, fire-fighting systems, audio-visual systems, security systems, computer systems, EPABX/ telecommunication system and other similar contracts. (v) Construction and maintenance of Civil works, such as, Green houses and other similar structures. Swimming pools. Bridges, flyovers, dams, barriers, diversions, or other similar structures. Canal, spillways or other similar activities. Roads, causeways, subways, or other similar contracts. Rail, railway overbridges or other similar activities. (vi) Any other contract for civil construction and maintenance as may be notified by the Commissioner. (B) Repair maintenance of any moveable property, including vehicles, annual maintenance contracts ( AMCs ) and other similar contracts. (C) All other types of works contracts, including those involving moveable goods, not specified elsewhere in this notification. 3 6 2 Every registered dealer engaged in construction, of a complex, building, civil structure or a part thereof, including a residential unit or a complex or building, for sale whether wholly or partly, to a buyer before construction is complete, where the value of land is included in the total consideration. Note: Contracts where the entire consideration is received after issuance of completion certificate by the competent authority are excluded here 1 3 3 Every registered dealer engaged in (i) Printing and/or book-binding. (ii) Textile processing such as dying, fabrication, tailoring, embroidery and other similar activities. (iii) Electro plating, electro galvanizing, anodizing, powder coating and other similar activities. (iv) Re-treading of old tyres 2 3 The dealers paying composition tax under the Composition Scheme notified vide Notification No. F.3(78)/Fin.(T E)/2005-06/1508 kha dated 17th March 2006 , shall have the option to shift over to this Scheme, subject to the terms and conditions of this Scheme,: Provided that the composition dealers under this notification shall not be eligible for the general composition scheme provided by Section 16(1) to 16(10) of the Act. 1 [PROVIDED FURTHER that the dealers who have already opted for the composition scheme notified on 28/02/2013 will have the option to withdraw from the scheme from the third quarter of 2013‐14 by filing Form WC‐02 by 31/10/2013. They shall in that case pay tax as normal dealers under section 3 of the Act w.e.f. 01/10/2013. ] Particular Conditions: Scheme A: A registered dealer opting to pay composition tax under this Scheme shall: (i) not purchase or procure goods from any place outside Delhi at any time during the period for which he opts to avail this Scheme; and (ii) not sell or supply goods to any place outside Delhi at any time during the period for which he opts to avail this Scheme. However, he may procure his own Plant Machinery and Equipments from outside Delhi, meant exclusively for use in execution of the works contract by him. Scheme B: A registered dealer opting to pay composition tax under this Scheme shall be entitled to make purchases of goods required for the execution of the contract under this Scheme in the course of inter-State trade or commerce on the strength of his certificate of registration against declaration in Form-C or by way of inward transfer of stocks from other States against Form-F or by way of imports from other countries solely for the purposes of utilizing the same in the execution of works contract in Delhi only,: Provided the dealer shall use the material/ goods imported or procured from outside Delhi strictly for use in execution of the works contract transactions. General Conditions: (1) The composition dealer opting for composition under this notification, shall: (i) not purchase or procure goods, other than those specified in the First Schedule appended to the Act, within Delhi, from a person who is not registered under the Act, except to the extent of 2 [5%] of his total purchase turnover during the year or 3 [Rs. 50 lakhs], whichever is lower; (ii) not be eligible to claim tax credit under section 9 and/ or section 15 of the Act; (iii) not compute his net tax under section 11 of the Act; (iv) not collect any amount by way of tax under the Act; (v) not be entitled to issue Tax Invoices ; (vi) continue to retain the originals of all tax invoices and all the retail invoices for all his purchases and copies of all retail invoices issued by him as required under section 48 of the Act; (vii) maintain separate records of all the purchases made within Delhi, or in the course of inter-State trade or commerce and by way of transfer of stock or from outside India; (viii) issue only Retail Invoices, as per provisions of the Act and the Delhi Value Added Tax Rules, 2005 (hereinafter called the Rules ); (ix) be eligible to claim set off of TDS only if on the date of filing of return, he is in possession of original 4 [/electronic] TDS Certificate issued to him by the person making the deductions; and (x) not entitled for refund before his assessment is made under section 32 of the Act. (2) All the provisions of the Act and the Rules, in so far as the same are not contrary to and inconsistent with this notification shall apply mutatis mutandis. (3) The term composition dealer means a contractor, or as the case may be a subcontractor, who has opted for the composition scheme under this notification. (4) The term sub-contractor means any person who has been awarded a works contract by the main contractor, or the sub-contractor, as the case may be. (5) A dealer who opts to pay composition tax under the notification and executes different types of works contracts which are liable to tax at different rates under this notification, shall pay tax according to the rate applicable to each of such contracts. 5 [PROVIDED that the dealer shall be eligible to opt for only one Scheme, that is either Scheme A or Scheme B , for all categories of works contracts to be executed by him in a financial year.] (6) The term Turnover for the purposes of this composition scheme means: (i) In relation to the category at serial No. (1) and (3), in Table total consideration, received or receivable by the dealer under the contract for transfer of property in goods (whether as goods or in some other form) involved in the execution of the contract together with the charges for labour, services and other like charges. (ii) In relation to the category at serial No. 2, in Table the total consideration received or receivable by the dealer under the contract for transfer of property in goods (whether as goods or in some other form) involved in the execution of the contract, including the value of land, charges for supply of labour and services and other like charges. (7) The tax period for the composition dealer shall be a quarter, unless otherwise prescribed by the Commissioner for a dealer or class of dealers. However, the tax due shall be paid by the composition dealer on monthly basis, within 21 days of the end of the month. (8) In case a dealer has opted for this scheme but has failed to comply with the conditions specified herein or who, at any later stage, is found not eligible for having opted for this Scheme, all the provisions of the Act and Rules including the liability to pay tax under section 3 , if any, shall apply mutatis mutandis as if the dealer had never opted for the composition scheme, from the financial year in which default had been committed and the amount deposited by such dealer as the composition tax, if any, shall stand forfeited 6 [to the extent of 50% ]. (9) The composition dealer who opts to pay composition tax under this scheme, shall make an application to the contractee/ awarder, not being an individual or a Hindu Undivided Family, authorizing it to deduct tax at source at such rate, as may be applicable to the contracts for which composition is opted by the dealer. The contractee shall deduct the TDS accordingly. The contractor shall not be able to claim benefit of the TDS in his return unless the contractee/ awarder has deposited the amount in the appropriate Government Treasury and the copy of the TDS Certificate obtained in the prescribed form and in the prescribed manner, along with challan in proof of such deposit is enclosed with the return. (10) Where any composition dealer, who has opted for composition scheme under this notification, sells, transfers or disposes of any capital assets, including plant, machinery and equipments, scrap, surplus, waste or discarded material, he shall not make such sale outside Delhi against Central Statutory Forms and shall pay tax on such sale, transfer or disposal at the rates specified in Section 4 of the Act, as if he had not opted for this Scheme. (11) No tax shall be payable under this Notification by a composition dealer on the amount representing the value of the goods supplied by the contractee to the contractor in the execution of works contract in which the ownership of such goods remains with the contractee under the terms of contract and the amount representing the value of the goods supplied by the contractee to the contractor does not form part of the contract and is not deductible from the amount payable to the contractor by the contractee for the execution of the works contract. Further, no TDS shall be deducted by the contractee on the value of goods supplied as such by it to the contractor. Modalities for availing the Scheme: (1) The dealer applying for a fresh registration can opt for this scheme by filing an application in Form WC 01 appended to this notification along with his registration application in Form DVAT 04. (2) A works contract dealer who is paying tax under section 3 of the Act, can opt for this scheme by filing an application in Form WC 01 appended to this notification within thirty days from the first day of the financial year with effect from which composition is opted,: 7 [Provided that a dealer who is paying tax under section 3 of the Act on the date of this notification or paying tax under the composition scheme notified on 28.02.2013 may opt for this scheme from the third quarter of 2013‐14 by filing an application in Form WC 01 .] Provided further that the dealer who is paying composition tax under the erstwhile Notification No. F.3(78)/Fin.(T E)/2005-06/1508 kha dated 17th March 2006 may opt for the composition scheme under this notification by filing an application in Form WC 01 appended to this notification within a period of thirty days from the date of coming into force of this notification. (3) A dealer paying tax under section 3 of the Act and opting to pay tax under this Scheme, shall be required to pay tax, at the rates specified in section 4 of the Act, on the entire opening stock of goods held by him on the first day of the period with effect from which the dealer opts to pay the tax under this Scheme. The dealer shall furnish, along with his application for availing for the composition scheme, the details of such stock and the payment of tax thereon in Form SS 01 appended to this notification along with the copy of challan in proof of payment of tax in DVAT 20 . 8 [However, as per the Form DVAT‐16 filed by the dealer, if the dealer has certain tax amount to his credit at the end of the second quarter of the year 2013‐14 or at the end of the previous financial year, as the case may be, he shall be entitled to adjust the amount payable as per SS‐01 with the said tax amount at his credit. After the said adjustment, if the dealer is still left with some tax amount at his credit, he may, at his option, either claim refund of the remaining amount or carry forward the same to subsequent tax periods. ] 9 [(3A) A dealer who is paying tax in scheme B under composition may opt scheme A (and viceversa) by filing an application to this effect in form WC‐01 by 31st October, 2013 for the last two quarters of the year 2013‐14 or within a period of 30 days from the 1st day of the year for that year with effect from which he opts to change the scheme: Provided that in case of a dealer changing from scheme B to scheme A , he shall be required to pay tax at the rate specified in section 4 of the Act , on the entire opening stock of goods held by him on the first day of October, 2013 for the year 2013‐14 or on the first day of the year with effect from which the dealer opts to change the scheme. The dealer shall furnish, along with his application for changing the scheme, the details of such stock and the payment of tax thereon in Form SS 01 along with the copy of challan in proof of payment of tax in DVAT 20 .] (4) Once a dealer has opted to pay tax under this scheme, he shall, except under the circumstances specified at Sl. No. (6) below, not be eligible to withdraw his option before the end of the financial year. (5) A composition dealer who, having opted to pay composition tax under this scheme for a particular year, does not intend to opt for payment of composition tax under this scheme for the following year, shall, subject to the conditions contained in section 20 of the Act, in so far as they are applicable, and further subject to furnishing of intimation regarding withdrawal from this scheme in Form WC 02 within thirty days from the end of the financial year, be eligible to claim credit of tax paid under the Act on the opening stock held by him on the first day of the year from which he opts out of the Scheme. (6) A composition dealer who has opted to pay tax under this scheme and has defaulted in furnishing the returns for two consecutive tax periods, by the prescribed due date for the latter tax period, shall, from the beginning of the tax period in respect of which the default was first committed: (i) cease to be liable to pay tax under this scheme (ii) be liable to pay tax under section 3 of the Act. Such a dealer shall also, subject to the conditions contained in section 20 of the Act in so far as they are applicable and further subject to furnishing the intimation in Form WC 02 within seven days after the end of due date prescribed for filing of return for the latter tax period in respect of which the default has been committed, be eligible to claim credit of the tax paid under the Act on the opening stock held by him in Delhi on the first day of the first tax period in respect of which the default was committed. 10 [(7) Where the composition dealer has made any payment to a registered sub‐contractor, who also opts for composition under this notification, for the execution of works contract, whether wholly or partly, the composition dealer shall issue a certificate to such sub‐contractor, in Form CC 01. Such sub‐contractor shall be eligible to deduct the amount of tax which shall be computed on the amount paid to him as mentioned in CC‐01, at the lower of the two rates of composition opted one each by the contractor and the sub‐contractor. The said CC‐01 shall be enclosed by the sub‐contractor along with his return. Further, the contractor is exempt from deducting TDS from payments made to such sub‐contractors in respect of the turnover covered by the certificate CC‐01. PROVIDED that in case where the rate of the composition tax of the contractor is lower than that of the sub‐contractor, the contractor shall be liable to deduct TDS at the differential rate of composition tax between the two, from payments made to such sub‐contractors in respect of the turnover covered by their respective Form CC‐01. For example , a contractor has issued Form CC‐01 for Rs. 1,00,000 to his sub‐contractor. The contractor has opted for composition scheme @ 3%, whereas the sub‐contractor has opted for composition scheme of 6%. In such case, the sub‐contractor shall be eligible to claim exemption of Rs. 3,000 [1,00,000 *3% (lesser rate of tax)] from his liability of Rs. 6,000 (6% of Rs. 1,00,000). Further, the contractor shall be required to deduct TDS at the differential rate i.e. 3% (6% ‐ 3%) on Rs. 1,00,000. (8) Notwithstanding anything contained in this notification, the Commissioner may notify, by a special or general order, that any or all of the forms appended to this notification shall be filed online. (9) All the provisions contained in the DVAT Act, 2004 and DVAT Rules, 2005 which are not contrary to the provisions of the composition scheme under this notification, shall apply to the dealers opting for composition.] This notification shall come into force with effect from 1st April 2013. By order and in the name of the Lt. Governor of the National Capital Territory of Delhi, (Ravinder Kumar) Deputy Secretary-VI (Finance) No.3(13)/Fin.(Rev-I)/2012-13 Copy forwarded for information and necessary action to: (1) The Pr. Secretary (GAD), Govt. of NCT of Delhi, Delhi Sachivalaya, New Delhi with one spare copy for publication in Delhi Gazette Part-IV (extraordinary) in today s date. (2) The Pr. Secretary to the Hon ble Lieutenant Governor, Delhi. (3) The Pr. Secretary to the Hon ble Chief Minister, Government of NCT of Delhi, Delhi Sachivalaya, IP Estate, New Delhi. (4) Pr. Secretary (Finance) Finance Department, Govt. of NCT of Delhi, Delhi Sachivalaya, New Delhi. (5) Commissioner, Value Added Tax, Department of Trade And Taxes, Vyapar Bhawan, I.P. Estate, New Delhi. (6) The Secretary to the Finance Minister, Government of NCT of Delhi, Delhi Sachivalaya, New Delhi. (7) The P.A. to the Leader of Opposition, 29, Delhi Legislative Assembly, Old Secretariat, Delhi. (8) The Addl. Secretary (Law), Government of NCT of Delhi, Delhi Sachivalaya, IP Estate, New Delhi. (9) OSD to Chief Secretary, Government of NCT of Delhi, Delhi Sachivalaya, IP Estate, New Delhi. (10) The Registrar, Delhi Value Added Tax Appellant Tribunal, Vyapar Bhawan, I.P. Estate, New Delhi. (11) VAT Officer (Policy), Department of Trade Taxes, Vyapar Bhawan, New Delhi. (12) Department of Trade Taxes s Website (13) Guard File. (14) Website. (Ravinder Kumar) Deputy Secretary-VI (Finance) Form WC 01, Form WC 02, Form SS 01, Form CC 01 --------------------- Notes:- 1. Inserted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 2. Substituted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 before it was read as, 2% . 3. Substituted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 before it was read as, Rs. 25 lakhs . 4. Inserted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 5. Inserted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 6. Inserted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 7. Substituted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 before it was read as, Provided that a dealer who is paying tax under section 3 of the Act on the date of this notification, may opt for this scheme by filing an application in Form WC 01 appended to this notification within a period of thirty days from the date of this notification: 8. Inserted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 9. Inserted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 10. Substituted vide NOTIFICATION No. 3(5)/Fin.(Rev‐I)/2013‐14/dsvi/801 dated September 30, 2013 before it was read as, (7) Where the composition dealer has made any payment to a registered sub-contractor, who also opts for composition under this notification, for the execution of works contract, whether wholly or partly, the composition dealer shall issue a certificate to such sub-contractor, in Form CC 01 appended to this notification. Such sub-contractor shall be eligible to deduct from his turnover liable to be taxed under this scheme, the amount mentioned in such certificate by enclosing it with his return. Such amount shall not constitute part of the turnover in Form DVAT 17 of such sub-contractor. The contractor shall not deduct TDS from payments made to such sub-contractors in respect of the turnover covered by the certificate.