no major importance by Builders Developers

8/15/2019 no major importance by Builders Developers

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Maharashtra Value Added Tax

WCT-TDS

Service Tax

Reverse charge mechanism

Income Tax

Income tax-TDS


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Composition Scheme USec! "#$%&

Actual 'xpense Method ur ()

Standard Deduction Method ur ()

Composition Scheme us "#$%A&

$*e+! ,,"#,,&


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(. tax on Agreement Value/o Deduction o+ 0and Value +rom Agreement

Value

Input Tax Credit is availa1le su12ect to

Retention o+ ".

,,. Tax Credit on Capital 3oods

4ption to Contractors - Contract Wise

Computations5

Taxable amount Tax liability

Contract value xxx 4utput vat 6 (. xxx

$-& su1-contract value xxx $-& Input tax credit 6

78.

xxx

Taxa1le value xxx Tax 0ia1ilit xxx


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Applica1le *hen 0and or Interest in land isalso conve9ed to the 1u9er along *ith trans+ero+ propert9 in goods

Deduction o+ 0a1our : Service Charges isavaila1le on actual 1asis

0and deduction is also availa1le 1ut maximum

up to ;,. o+ the contract valueSet o< is availa1le on all inputs


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Particulars Amounts

Total Wor=s Contract Value

$Agreement value or Stamp Dut9 value> *hich ever is higher&

???

$-& Allo*a1le Deduction ur ()$A& +or land cost ???

$-& Allo*a1le Deduction ur ()$& +or la1ourservices5 ???

Su1@Contract price paid ???

0a1ourservice Charges +or execution o+ WC ???

lanning> Designing : ArchitectBs +ees ???

ire Charges or other*ise> +or o1taining Machiner9 : Tools ???

Cost o+ Consuma1les ???

Cost o+ 'sta1lishment ???

Similar other expenses relata1le to suppl9 o+ 0a1our : Services ???

rot relata1le to suppl9 o+ 0a1our : Services ???

Taxa1le value $su12ect to stage deduction& ???

4utput tax $on the value a+ter stage deduction& ???

$-& Input tax ???

Tax lia1ilit9 ???


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Applica1le *hen contractor has not maintainedaccounts *hich ena1le a proper evaluation o+ thedi


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Sr.No.

Stage of contract Amount ofgoodsinvolved incontract

Ee+ore issue o+ the Commencement Certicate! ,,.

# From the Commencement Certicate to thecompletion o+ plinth level!

7(.

% A+ter the completion o+ plinth level to thecompletion o+ ,,. o+ RCC +rame*or=!

)(.

" A+ter the completion o+ ,,. RCC +rame*or= tothe 4ccupanc9 Certicate

((.

( A+ter the 4ccupanc9 Certicate /I0


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Tax pa9a1le *ill 1e . o+ Agreement Value

Agreement Value *ill 1e the value specied inAgreement or value +or the purpose o+ StampDut9> *hichever is higher

/o deduction +or 0and Cost

/o Input Tax Credit is availa1le


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Agreement must 1e registered

Dealer should include the agreement value inturnover o+ sale in the period in *hichagreement is registered

a9ment o+ VAT should 1e made electronicall9

In relation to the contracts against *hich he is

pa9ing tax under composition scheme> hemust not use goods purchased against C @Form

Dealer should not issue Tax Invoice


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Applica1ilit9Applica1le +or Wor=s Contract Transaction

'mplo9er emplo9ing Contractor +or Wor=Contract

a9ments are exceeding Rs! ( lacs in a nancial9ear!

Rate o+ WCT

#. in case o+ Registered Dealer

(. in case o+ unregistered dealer/on Applica1ilit9

In case o+ Inter state trade

a9ment made to Su1-Contractor


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'mplo9er to o1tain registration Tax deductionnum1er in Form /o ", *ithin % months +rom theda9 he 1ecome lia1le to deduct the tax!

Remittance o+ tax to 3overnment Treasure in*ithin # da9s +rom the expir9 o+ the month!

'mplo9er shall maintain the record o+ amount o+tax deduction in +orm ","!

'mplo9er is reGuired to issue certicate tocontractor in +orm ",# and le annual TDS returnin +orm "#"!


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H! & Man9 times mere advances are received and agreement is executed muchlater! What *ill 1e the point o+ lia1ilit9

A - Tax *ill 1e levied +rom the date o+ the agreement! The amount o+ advance> asand *hen it is ad2usted to*ards the agreement amount> *ill 1e taxed!

H! #& The 1uilders receive non-re+unda1le deposits and other charges under theagreement such as electricit9 deposit> *ater charges> etc! Whether suchreceipts *ill also +orm part o+ sale price +or VAT

A - The amounts *hich are received as deposits *ill 1e a deduction to the extentsuch amounts are actuall9 paid to other authorities!

H! %& Can the VAT applica1le in a1ove cases 1e collected 19 raising a de1it note orthe same should 1e mentioned in the agreement itsel+ Whether VAT should 1ecollected on each installment or at one go upon execution o+ the agreement

A - Jes! It can 1e collected 19 raising a de1it note! Specic mention in the

agreement is a choice o+ the contracting parties! It *ill 1e pa9a1le on theinstallments received!

H! "& What *ill 1e the VAT implications *here mere advances are received +rom1u9ers and agreement +or sell is not executed *ith the 1u9er

A - There is no tax lia1ilit9!


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H! (&In the event *here an agreement entered into is cancelled and

said Kat is sold to someone else and the agreement is againentered! What *ould 1e the VAT implication +or the rst sale andthe second one

A - I+ the rst sale o+ Kat is cancelled then the su1seGuent sale o+ thesame Kat 19 the developer is taxa1le! The tax paid on rst sale can1e ad2usted to*ards su1seGuent sale!

H! 8& I+ 1uilder constructs the Kat on the land *hich is o*ned 19 lando*ner and out o+ the constructed Kats some Kats are given to lando*ner and other Kats are sold 19 1uilder to prospective 1u9er! 0ando*ner sales the Kat a+ter*ards to 1u9ers! In such instance *hat *ill

1e the point o+ taxation Whether land o*ner is lia1le to pa9 theVAT on sales o+ Kats *hich *ere handed over to him 19 1uilder

A - Euilder is lia1le to pa9 tax onl9 in respect o+ sale o+ Kats toprospective 1u9ers! The Kats *hich are given to land o*ners *illnot 1e taxa1le! The land o*ner *hen su1seGuentl9 sales the Kat*ill not lia1le to pa9 an9 tax as he is not a dealer!


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Service tax lev9 on the service portion provided19 the contractor to purchaser or dealer!

A+ter the negative list regime the constructiono+ a complex> 1uilding> civil structure or a part

thereo+> including a complex or 1uildingintended +or sale to a 1u9er> *holl9 or partl9has 1een declared to 1e a service lia1le toservice tax! o*ever> i+ the entire consideration

+rom the prospective 1u9er is received a+terissuance o+ completion certicate 19 competentauthorit9 then it is outside the purvie* o+declared service!


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"! Wor=s Contract Service Shall include5-la1our charges +or execution o+ the *or=sL

amount paid to a su1-contractor +or la1our and servicesL

charges +or planning> designing and architects +eesL

charges +or o1taining on hire or other*ise> machiner9and tools used +or the execution o+ the *or=s contractL

cost o+ consuma1les such as *ater> electricit9> etcL

cost o+ esta1lishment o+ the contractor relata1le to

suppl9 o+ la1our and servicesLother similar expenses +or Suppl9 o+ 0a1our and Services

prot earned on Suppl9 o+ 0a1our and Services


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Applica1le *here the VAT is paid undercomposition scheme5- Standard DeductionSchemeSr.No.

Situation Value of Service inexecution of

workscontract

A In case o+ original *or=s contract ",. o+ the totalamount charged

+or *or=s contractE In case o+ *or=s contract entered

into +or maintenance or repairs;,. o+ the totalamount charged+or the *or=scontract


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The term Noriginal *or=sB means5

i! All ne* constructionsL

ii! All t9pes o+ additions and alterations toa1andoned or damaged structures on

land that are reGuired to ma=e them*or=a1leL

iii! 'rection> commissioning or installation

o+ plant> machiner9 or eGuipment orstructures> *hether pre+a1ricated orother*iseL


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DescriptionAbatement Taxable

!NVATavailability

Construction o+ complex or1uilding-

& For Residential Unita& having carpet area less

than #,,, SG! Ft!A/D

1& Amount charged is lessthan Rs! crore

;(. #(.

Credit allo*ed

onl9 on 5- - Capital3oods - InputService

#& For other than the $&a1ove

;,. %,.

Credit allo*edonl9 on 5- - Capital3oods - InputService


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Services by way of construction" erection" commissioning" or

installation of original works pertaining to# an airport> port or rail*a9s $including monorail or metro&

single residential unit other*ise than as a part o+ a residentialcomplexL

lo*- cost houses up to a carpet area o+ 8, sGuare meters

post- harvest storage in+rastructure +or agricultural produce

mechaniOed +ood grain handling s9stem> machiner9 or eGuipment+or units processing agricultural produce


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Nature $fService

ServiceProvider

Service%eceiver

Percentage ofService Tax w&ic&is to be born by

Servicerovider

ServiceReceiver

Wor=s ContractService

Individual UFartnershipFirm

Eod9Corporate

(,. (,.

Wor=s ContractService

Eod9Corporate

Eod9Corporate

,,. /il


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Taxa1ilit9 *ill arise on5Date *hen invoice is issued +or services

provided or to 1e providedL $invoice is reGuiredto 1e issued *ithin %, da9s> other*ise> the

point o+ taxation *ill 1e the date o+ provision o+service&

Date *hen the pa9ment is received +or services

provided or to 1e providedLw&ic&ever is earlier


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If contract is covered under continuous Suppl9 o+Service *here the provision o+ the *hole or parto+ the service is determined periodicall9 on thecompletion o+ an event in terms o+ a contract>

*hich reGuires the receiver o+ service to ma=e an9pa9ment to service provider> then the date o+completion o+ each such event as specied in thecontract shall 1e deemed to 1e the date o+completion o+ provision o+ service!


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H! & We have received land +rom the land o*ner and *e have agreed to

give him some Kats in lieu o+ the land! Is service tax pa9a1le

A - Service tax *ill indeed 19 pa9a1le! In +act> as soon as 9ou getpossession o+ land +rom land o*ner> it is Nadvance receivedB andservice tax *ill 1ecome pa9a1le next month!

H! #& Service tax has 1een charged to customer and deposited *ithdepartment! 0ater> customer surrenders the 1oo=ing and re+und ismade to him! What are the implications in service tax

A - I+ 9ou re+und the entire amount along *ith service tax to customer>then 9ou can ad2ust the service tax in 9our su1seGuent pa9ments o+service tax!

H! %& Can *e adopt di


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From Financial Jear #,%-"> section "%CAlev9 the tax on trans+er o+ immova1lepropert9 $land or 1uilding or 1oth& held instoc=!

And the section (,C is applica1le +orimmova1le propert9 held in the nature o+Qcapital asset under section (,C o+ the Act!


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There+ore the provision o+ section "%CA shall 1eapplica1le> +or the real estate developers and1uilders *ho are dealing in real estate properties!

Eoth section reGuires that in case land or 1uilding or

1oth> is trans+erred 19 a trader a real estatedeveloper +or a value less than stamp dut9 valuenotied 19 the stamp dut9 authorit9> stamp dut9value in such a case shall 1e deemed to 1e the +ullvalue o+ the sale consideration to such person and he

shall 1e reGuired to compute his taxa1le 1usinessincome $"%CA&capital gain $(,C& 19 su1stituting theactual sale consideration *ith the a1ove mentioneddeemed sale consideration!


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rovision o+ Section "%CA is applica1le toAssesses *ho deal in immova1le propert9 1eing

land or 1uilding or 1oth!

held 0and or Euilding or 1oth as stoc= in trade!

trans+er o+ o*nership 19 an9 mode! Stamp Dut9 valuation is to 1e ta=en on the

date o+ entering into Sale Agreement insteado+ value on the date o+ trans+er o+ ropert9!

I+ +air Value assessed 19 Valuation ocer isalso less than Stamp Dut9 then such FairValue shall appl9!


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Trans+eree is reGuired to deduct Tax on trans+ero+ Immova1le ropert9

at the time o+ a9ment or

at the time o+ Credit o+ such sum to hisaccount

*hichever is earlier

/ot applica1le i+

/o tax to 1e deducted *here the saleconsideration is less than (, 0acs or 0and isrural agricultural land!

TDS to 1e deducted 6 .

TDS to 1e deducted on an9 amount paid orcredited to pa9ee 1eing resident o+ India!


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I+ deductee does not +urnish A/ then deductor

*ill Deduct tax at source at higher o+ the+ollo*ing rates5

The rate prescri1ed in the ActL

At the rate in +orce i!e! the rate mentioned in the

Finance ActLAt the rate o+ #,.

And the TDS deducted under Section 7"IA shall

1e paid to the credit o+ C3 *ithin ; Da9s +ormthe end o+ the month in *hich deduction *asmade!


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Disclaimer5 The material in this presentation on ever9 aspectis not an exhaustive or comprehensivel9considered> hence onl9 +or academic purpose!

It is advisa1le to consult pro+essional 1e+ore an9sort o+ applicationdecision!

/either the author nor the pu1lisher *ill 1eresponsi1le +or the interpretation andor use o+the in+ormation contained herein andor +or theresult o+ an9 action ta=en on the 1asis o+ this*or=> *hether directl9 or indirectl9 +or an9 error>omission or inaccurac9 or other*ise> to an9person!


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Contact5Mo15 77#%;7(")'-mail5ra=esh2es*ani;)(6gmail!com

Areas o+ studies : experiences5 TA?ATI4/ ACC4U/TS AUDITI/3FI/A/C'

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no major importance by Builders Developers