Aug 132014
 

WHO ARE LIABLE TO DEDUCT

For the purposes of Works Contract TDS, a person who is liable INCLUDES :-

(i)                 Central/State Government,

(ii)               A local authority,

(iii)             A corporation or body established by or under a Central or State act

(iv)             A company incorporated under Companies Act,1956 including Central or state Government undertaking;

(v)               A society

(vi)             An educational institution ; or

(vii)           A Trust

 

WHEN TAX NEEDS TO BE DEDUCTED

Every person , as above, who are paying ay sum to any dealer for execution of works contract shall, AT THE TIME OF PAYMENT of such sum, deduct TDS at the rates as mentioned below :-

 

Type of Contract % of WCT-TDS
Civil Works Contract 2% of the total amount payable to such dealer
Civil Maintenance Works Contract 2% of the total amount payable to such dealer
All other works contracts 5% of the total amount payable to such dealer

 

EXCEPTIONS

No deduction of tax shall be made in the following circumstances :-

(i)                 no transfer of property in goods is involved in the execution of such works contract , or

(ii)               transfer of property in goods is involved in the execution of works contract in the course of inter-state trade or commerce or in the course of import ; or

(iii)             the dealer produces a Certificate in Form “S” from the assessing authority that he has no liability to pay or has paid the tax.

(iv)             When the total payment does not exceed Rs. 1 Lakh per annum.

 

TIME LIMIT FOR DEDUCTION

The person making payment of WCT TDS shall deposit the sum so deducted to the assessing authority having jurisdiction over the person or to any other authority authorized (In Chennai :- TDS Circle, Greams Road) on or before 20th day of the succeeding month in which the deduction was made.

 

RELEVANT FORMS

 

Sl No Nature of Form Form No
1 Statement of Tax Deduction (to be filed by the person deducting tax) Form R
2 Certificate (to be obtained by the dealer) for no deduction of WCT TDS Form S
3 Certificate of TDS (to be provided by the person deducting tax) Form T

TIME LIMIT FOR ISSUE OF TDS CERTIFICATE

 Any person who makes TDS and Depositing the same , shall within 15 days of such deposit, issue the dealer, a Certificate in Form T, for each deduction separately.

LATE PAYMENT

In case the amount of paid late, the person who is responsible for deduction of tax shall pay, in addition to the sum deducted, Interest @ 2% per month on TDS or the entire period of default.

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Comments

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  18 Responses to “TDS ON WORKS CONTRACT UNDER TNVAT ACT”

  1. I work in a public limited company in Maharashtra. In Maharashtra TDS on WCT is being deducted @ 2% for registered dealers and 5% for unregistered dealers. In case of inter-state works contract i.e. works contract involving goods dispatched to us from other states, we have been deducting TDS on WCT @ 5% on materials portion only, instead of the entire contract value, which is normal practice. Please advise whether this is correct practice.

    • Dear Mr. Pushkar Mahajan

      We are dealing only in TNVAT. We request you to kindly take inputs from professional dealing in M-VAT for clarification on your query.

  2. Dear Sir,

    Under TNVAT, whether TDA provision is applicable for Unregistered contractors ??? Here, any Dealer means Registered or Unregistered ??? Please clarify. Thanks

    • Dear Mr Shekar

      In my opinion, there is no difference between Registered/Unregistered dealer for the purposes of TDS under Section 13 in view of the fact that the words in section 13 reads ” every person responsible for paying any sum to ANY DEALER for execution of works contract…..” . Moreover the definition of the words “dealer” (section 2(15) ) also starts with a word ” dealer means any person who carries on the business……..” and there is no mention about the registration.

  3. WCT TAX DEDUCTION & VAT CHARGED ON %

  4. Dear Sir,

    Please clarify the implication of Sec 12 Purchase tax and WCT TDS in the case of payment by an individual to an Unregistered contractor. Thanks.

    Regards
    -Shekar R

    • Dear Sir

      WCT will be applicable even in case of payments to unregistered dealers also. This is also evident in the Form R which is the form for remittance of TDS wherein there is a specific column which needs to be filled up if the payment is for unregistered dealer.

  5. Dear Sir,

    Thanx for the reply,sir. It’s strange that the same person pay tax u/s 12 and take ITC and also deduct TDS and remit it on behalf of the other. It.s confusing!

    Regards.

    -Shekar

    • Sir,
      there is no confusion in my opinion.
      Tax u/s 12 is the cost to the dealer..
      But WCT TDS is not cost to the dealer. it is just a deduction from the payer and the tax is borne by the payee…
      regards
      -sridhar

  6. Dear Sir,
    One of Client is Builder and entered into JV agreement with owner for construction of flats on 50:50 basis. Out of total 6 flat, 3 flat will be given to builder and 3 will be retained by land owner. Builder is paying TN Vat @ 2% (civil construction) on compounding basis on flat sold by him.

    Whether he is liable to pay 2 % VAT on 3 Flats given to Land owner under JV Agreement Free of Cost in lieu of UDS.

    • In my opinion, the flats being constructed are the consideration for 50% of the Land. Hence VAT liability on the same also arises.
      If you have any other interpretation, please share the same

  7. Dear Sir,

    Please clarify whether VAT-TDS is applicable for payments made by main contractor to sub-contractor.

  8. Dear Sir,

    My client is a business firm registered under TN VAT Act, supplies Bleaching Powder to a Panchayat / Municipality under TN VAT Invoice. The said business firm is purely a supplier and have not rendered any works contract to Panchayat / Municipality. Now, the officer of Panchayat / Municipality has informed that they have to deduct TDS under TN VAT Act on firm’s Sales Invoice (supply of Bleaching Powder only).

    Please clarify the following:
    a) Whether TDS under TN VAT is applicable on pure Sale (supply) of Bleaching Powder to a Municipality thro’ VAT Invoice?

    b) If the Municipality deduct TDS under TN VAT, what is the remedy to get back?

  9. sir
    any time limit for carry forward of VAT-TDS

    • There is no specific time limit mentioned. But it is advisable to claim within 2 months from the date of certificate or before end of the financial year whichever is earlier.

  10. sir i have received TDS Certificates for works contract only on december 2015, its value is around 4.00 lakhs and i have just carried forward the amount in my VAT return
    what should i do sir? should i insist the department for refund chq? or c/f

  11. Dear sir,

    pls clarify the below doublt.

    In the Dyeing cotract, the vendor used to charge VAT say 2.50% in the Invoice. In that case whether TAX deduction is mandatory ?
    The customer charged VAT of WCT in the Invoice, whether Form S is mandatory for non deduction ?

    If TDS non deducted whether Interest and penalty will apply ?

    Thanks you

    • Dear Sir

      there is no connection with vendor charging VAT & TDS liability. You need to deduct TDS from the contract payment, irrespective of the fact that vendor is charging vat or not. The deductor has to file Form R & T and issue the TDS certificate to the deductee.

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