Want to know about rule 58

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2015 Dear Experts,

i am working with civil contracting firm which is construction of residential & commercial buildings. Its a pvt ltd co.and we are coming under works contract of composition scheme in mvat. One of our client(developers) is following Rule 58 under MVAT. I want to know that, Is rule 58 applicable to us? if applicable then how will we charge vat in our billing? want to know computation of vat under this rule? how to maintain books of accounts under this rule?
Please send your valuable advice on above querry
Thanks in advance

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2015 IS no body there to answer me on my above querry? please help me out.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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03 August 2025 Got your question about Rule 58 under MVAT (Maharashtra Value Added Tax) in relation to your civil contracting firm and works contract composition scheme. Here's a detailed explanation to help you out:
What is Rule 58 under MVAT?
Rule 58 relates to the levy and computation of VAT on works contract in Maharashtra under the MVAT Act.
It provides a special composition scheme for works contractors where VAT is paid on a presumptive basis instead of the usual VAT on actual turnover.
Applicability to Your Firm
Since your firm is engaged in civil contracting for residential and commercial buildings, you qualify as a works contractor.
If your firm is registered under the composition scheme of MVAT for works contract, Rule 58 applies to you.
Key Points under Rule 58:
Tax Computation:
VAT is charged on a presumptive value rather than actual sales.
Presumptive value is computed as a percentage of the gross amount charged for the works contract.
Typically, VAT is calculated as 4% of the total contract value (this rate can vary as per government notifications).
The tax is inclusive in your billing amount.
Invoicing/Billing:
You must mention in your invoices that VAT is charged under Rule 58.
The invoice should clearly show the contract value and VAT amount separately.
Example:
Contract value: ₹10,00,000
VAT @ 4% = ₹40,000
Total invoice = ₹10,40,000
Books of Accounts:
Maintain detailed records of all contracts.
Maintain separate accounts for the contract value and VAT collected.
Keep copies of all bills, purchase invoices, and payment receipts.
Maintain a register specifically for works contract sales under Rule 58.
Tax Payment & Returns:
Pay VAT as per the due dates under the composition scheme.
File returns specifying the tax paid under Rule 58.
Does Rule 58 Apply to Your Clients?
Your client (developer) following Rule 58 means they are also under the works contract composition scheme.
Your firm should ensure compliance similarly and charge VAT accordingly.
Summary:
Aspect Details
Applicability Works contractors under composition scheme
Tax Rate Usually 4% of contract value (check notifications)
Billing Show contract value + VAT separately
Accounting Maintain detailed registers for contracts and VAT
Compliance Timely tax payment & return filing
Final Note:
Confirm the exact rate and latest updates on Rule 58 from the Maharashtra Commercial Tax Department or a tax consultant.
The composition scheme is meant to simplify VAT compliance but needs careful record-keeping.

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