Composition scheme
This query is : Resolved
05 May 2012
is there any turnover limit to adopt composition scheme under Vat System ?
05 May 2012
Yes, Dealers having total turnover more than 10Lakhs but less than 5olakhs can opt composition scheme.
07 May 2012
But i found during the audit of contractor of real estate having turnover more than 1 crore is in compostion scheme ? how is it possible ?
07 May 2012
You might have seen works contract,where there is no turnover limit, vat can be paid at a rate specified under respective state on total value .
07 May 2012
Does it mean that there is no turnover limit to adopt composition scheme under work contract ? what means a rate specified under respective state ? is it concessional rate or a normal rate ? please clarify in detail, if possible ....
08 May 2012
Composition scheme for works contract is simpler option for those Contractors who cannot maintain the proper Accounts, Record of the material and other portion in their contracts. The contractee / customer prefers this option as small amount of Composition Tax 2% / 4% is payable to the Contractor instead of 12.5%/14.5% VAT payable in legal options.
under the “Composition” option, the Contractor has to pay Composition Tax (VAT) on the total Contract value / price, No deduction of labour is available in this option. Similarly, No VAT set off / Credit is available on the purchases of inputs to the Contractors and the same is not available to the Contractees also.
The Rates of Composition Tax differ from state to state. Generally it is 2% (for civil contracts) @ 4% for other Contracts.
under the “Composition” option, the Contractor has to pay Composition Tax (VAT) on the total Contract value / price, No deduction of labour is available in this option. Similarly, No VAT set off / Credit is available on the purchases of inputs to the Contractors and the same is not available to the Contractees also.
The Rates of Composition Tax differ from state to state. Generally it is 2% (for civil contracts) @ 4% for other Contracts.
09 May 2012
thanks.........
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09 May 2012
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