Karnataka VAT - Composition scheme for Works Contractor
- He should be a registered dealer.
- He should not be an unregistered dealer in the preceding one year.
- He shall not be a casual dealer.
- On the date of opting for composition he shall not have in his stock, any goods brought from outside the state.
- He shall not be dealer selling liquor.
- He shall not effect any CST sale.
- He shall not effect any exports.
- Dealer need not maintain detailed books of accounts
- He should pay tax at regular rates (not composition amount) in respect of materials used in works contract that have been purchased/procured from outside the state. Tax payable shall be with reference to purchase value and it shall be deducted from total consideration.
- He may collect the composition tax.
- He shall not issue tax invoices; he shall issue only bill of sale.
- Composition amount need to be paid on total consideration minus the composition tax.
- Composition amount is not payable in respect of sub-contract payments.
- In respect of local sales (other than works contract) – tax shall be paid at regular rates.
- He shall not do inter-state works contracts.
- He shall not do export works contracts.
- He shall not claim any input tax deductions.
- He shall pay tax on URD purchases and such tax shall be over and above composition amount.
- Minumum one year , he should be in the Composition Scheme before moving into Regular Scheme
- He has to a final return.
- Composition certificate has to be surrendered to the Department.
- From the 1st day of the following month, he should pay taxes on regular scheme.
- Cooling off period for re-entry into Composition Scheme is ONE YEAR
A good post. This is probably best post by you, keep the level of tikshare high.
Suppose someone is doing business for a long time without VAT registration is caught by VAT officers.
Can he choose the type of registration, can he opt between Works contract rates or Normal Rates?
Thank you for liking the post. Its very well explained by CA Vedanta.
If you also have some knwoledge or doubts, you can discuss on tikshare.
Hi Amol Kulkarni,
Thanks for joining Tikshare. Kindly ask any kind of doubts and suggestions either on my mail id email@example.com or directly on tikshare.com/forum/post
THANK U FOR SHARING VALUABLE INFORMATION
MY QUESTION IS FOR CONTRACOR WHO GIVE THE WORK TO SUB CONTRACTOR IF THE SUBCONTRCTOR IS BILLING IN COMPOSITION THEN CONTRACTOR HOW TO BILL TO CUSTOMER ?
TAX ON PURCHASES FROM SUBCONTRACTOR IS AVAIBALE INPUT TAX CREDIT IF CHOOSE TO NON COMPOSITION ?
Thank you CA Vedanta Deshika by providing useful information.
I have still some doubts in Works contract -composition scheme.
There are cases where contractor issues materials to the subcontractor for consumption in the subcontracted work. These issued materials may be issued at (a) actual procurement price (b) at fixed agreed price (irrespective of the actual procurement price) as agreed in the work order, or at (c) price higher than procured price, say, adding 5% of material cost towards material handling charges to the material cost. Contractor recovers these materials by raising debit note to the subcontractor. In these transactions, shall the contractor pay VAT? The subcontractor uses these materials only in the subcontracted work.
Can you clarity the same pls............