Works Contract - TDS

S. 31 of the MVAT Act provides that the Commissioner may, by notification, require any dealer or person or class of dealers or persons (hereafter referred as ‘the employer’) to deduct tax on such amount payable on the purchases effected by them, as may be notified. All such employers shall have to :

(a) Take a Tax Deduction Number (Works Contract) from the Sales Tax Department. Application to be made, in Form 401, within three months from the day he becomes liable to deduct TDS.

(b) Deduct tax, at prescribed rate, from the amount paid or payable to a contractor during a given period. 

(c) Deposit the amount so deducted with the Govt. treasury within 10 days from the end of month in which such tax is deducted or is required to be deducted.

(d) Issue a certificate of deduction of tax, immediately, in Form 402.

(e) Submit monthly (quarterly) statement of tax deducted at source, in respect of each of such contractors, to the respective prescribed officer, in Form 403, within 20 days from the end of the month.

(f) Maintain necessary records in prescribed format, Form 404.

(g) File an annual return of TDS, in Form 405, within 3 months from the end of the year.

(h) Attend and produce records before the assessing authority as and when asked to do so.

Notes :

1. A contractor, awarding sub-contracts, is not required to deduct TDS from such sub-contractor.

2. TDS provisions are not applicable in respect of works contract liable to tax under the CST Act.

3. TDS not required to be deducted where the amount or the aggregate of the amount payable to a dealer by such employer is less than Rs.5 lakh during any year.