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TDS under MVAT Act (VAT)

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( Author )
09 February 2011

Dear All

Can anyone explain me about tds to be deducted under MVAT act while making payment for work contract related payments like?
and who has to deduct tds whether register dealer or non register dealers or both..

Is there any limit for deducting tds under mvat act?


Hitender Gaur

( Expert )
10 February 2011

Section 31 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.

11. All such employers shall have to: –
. 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.
a. Deduct tax, at prescribed rate, from the amount paid or payable to a contractor during a given period.
b. Deposit the amount so deducted with the Govt. treasury within 10 days from the end of month in which such tax deducted or required to be deducted.
c. Issue a certificate of deduction of tax, immediately, in Form 402.
d. Submit monthly (quarterly) statement of tax deducted at source, in respect to each of such contractor, to the respective prescribed officer, in Form 403, within 20 days from the end of the month.
e. Maintain necessary records in prescribed format, Form 404.
f. File an annual return of TDS, in Form 405, within 3 months from the end of the year.
g. Attend and produce records before the assessing authority as and when asked to do so.
Notes: –
8. The TDS provisions are applicable only to specified employers.
9. The tax is required to be deducted only in such cases, where payment to a dealer (contractor) is Rs. 5,00,000/- or more during a year.
10. There are provisions for reduced rate of deduction or no deduction certificate, granted by the Commissioner, on an application, in Form 410, made by the concerned dealer (contractor).
11. A contractor, awarding sub-contracts, is not required to deduct TDS from such sub-contractor.
12. TDS provisions are not applicable in respect of works contract liable to tax under the CST Act.



CA Ashish

( Author )
18 February 2011

thanks a lot for reply;
one more thing I want to know is that there is a finance company (NBFC) and provisions of VAT are not at all applicable to this finance company since the company does not deal into selling / buying sort of things. however, the company during the year has made huge payments to civil and interior contractors for restructuring of new premises including payments made for furnishing of office and related payments. The finance company is not a registered dealer and hence does not have TIN number for VAT under MVAT.

However, refering to provisions of TDS under MVAT Act for payments made which read as: " Section 31 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. and it is also provided under MVAT for specified employers to deduct the TDS on amount payable on the purchases effected by them, as may be notified..

My Queries in relation to deduction of TDS amount is as under:

1) can the finance company (NBFC) fall within the definition of specified employers though MVAT is not applicable to it and it is not a registered dealer?

2)the above provisions of section 31 talk about the amount payable on purchases effected by them (ie specified employer);My question is whether TDS is also to be deducted or not on the payments made for work carried out, nature of work being structural and furnishing done at new office premises.

3)if TDS is required to be deducted by finance company; for that, company is supposed to hve Tax deduction number, how the number can be availed? what is procedure?

4) and finally, if TDS is anyhow required to be deducted for payments made even on civil structural and furnishing done at new office premises (work contract as generally we call it), and company has not deducted the TDS on the payments have already been made. CAN TDS now be deducted (after obtaining TDS number from sales tax department)on the amount (which have already been paid) and deposited with Exchequer along with interest. what would be the rate of interest since TDS is supposed to be paid late as of now..???

can anyone explain the same on the above issues??


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