Composition under karnataka vat act

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D K BAYYAREDDY

CHARTERED ACCOUNTANT

33 Points Posted on 23 December 2012

Dear Sir,

Buliders registered under KAVT laws in karnataka, opting for composition scheme, can collect VAT of 4% from the prospective buyers towards sale of flats in apartments or it is an cost to builder which builder has to pay from his pocket?

Some Materials say "Yes" and some materials say "No". Kindly clarify

Regards,

bayya reddy

Replies (2)

Gururaj V Megharaj

IPCC

82 Points Posted on 26 December 2012

Some builders opts inclusive & some charge on the sale amount.

So it is the builders has to decide.

Usually it would be inclusive.

Ramakrishna Kamat

62 Points Posted on 28 December 2012

Section 15 of KVAT act provides for Composition of tax. Four categories of dealers are allowed to pay tax on composition.

a. Small dealers

b.Works contractor

c. Hotels etc

d. Crushing units

Rule 139 of KVAT rules provide for duties of dealer executing a works contract and hotelier under composition. It says the dealer shall not collect tax on his sales if he is a dealer falling under clause c of section 15 (1) ie. if he is a hotelier. So the restriction of not collecting tax is not applicable to works contractor opting for compostion. Such works contractor can collect the tax.