AMIT BAJAJ ADVOCATE

Punjab circular – Works contract – TDS Deposit guideline

Circular no.01/VAT-1/2012/TD/                              Dated 9-11-2012

1.         The tentative draft paragraph titled "Taxation on works contracts under PVAT" intended for inclusion in Comptroller & Auditor General of India Audit report (Revenue Receipts) of Punjab government for year 2011-12 has highlighted the deficiencies in compliance to provisions of Punjab VAT Act, 2005 by various Departments of State government.

2.         This circular is being issued to reiterate the legal obligations enshrined under Punjab VAT, 2005 on Departments of State government which are getting works contract executed from different contractors in the state.

3.         The Departments have to comply with provisions of Punjab VAT Act 2005 & Rules framed thereunder, particularly with regard to provisions of Sec 27,Rule 46 and Forms VAT-25,VAT-26,VAT-27 &VAT-28 which have been detailed as below:

(a)                The Departments must furnish information about each contract which is Rs 5.00 lac or above in Form VAT-25 to the Excise & Taxation Department along with copy of contract within 30 days from entering into such contract.

(b)                The Departments must apply for Tax Deduction Number (TDN) to the Excise & Taxation Department in Form VAT-26 & deduct TDS from contractor.

(c)                The TDS deducted from the contractor has to be deposited by the Department within 15 days from close of each month in government treasury. The TDS must be deposited in correct head of account (0040).

(d)               Further, each department must file monthly returns in Form-27 to the designated officers of Department of Excise & Taxation regarding payment of each works contract being executed for them by the contractor.

(e)                All departments must ensure that any contractor applying for any government contract of more than Rs 5.0 Lakhs for single work must have VAT Registration Number (TIN) issued by Department of Excise & Taxation.

(f)                 All departments must mention in the notice inviting tenders that only those contractors having VAT Registration Number (TIN) are eligible to participate in the tender process.

(g)                If the Departments of state government are supplying any material to the contractor, they must get VAT registration No. (TIN) from Excise & Taxation department & issue VAT invoices to contractors.

(h)                The Departments handling construction work may appoint a nodal officer for coordinating with Excise & Taxation department through  Director (Excise &Taxation) (987291004, additionalexcise@yahoo.com) for proper realization of VAT.    

Chandigarh

Dated : 09-11-2012                                                     A.Venu Prasad

                                                            Excise & Taxation Commissioner, Punjab.