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K.chandrasekaran (Partner)     12 June 2010

Tamil nadu VAT -works contracts

one of  my client who is an assesse  under  tamil nadu  vat act  in signage  business  submitted his  option  under sec 6 to pay vat  under compunding  scheme  for works  contracts  at the  beginiing of the year without  specifiying any particular contract from  amonst  several contracts  from  various  parties.

Also he sells flex printed boards and other boards as sale of  goods and  has sold condemned machinery during the year.

he  has  been submitting  form L returns only  as required  under the  act and  now  he submitted form I also for the same financial year  inrespect of  sale of goods and old  machinery .

Now the CTO says  he  can submit only  form  L an not form I also for the same year  as  he  has  opte dto  pay vat under sec 6.

Form L does not contain any provision  to enter sale of  goods VAT and input claim.

Is this  ccorrect?

Further it is  undrsstood that the  option  must  be for  contact wise and anot necessarily  for all contracts.

Hence  what is the correct position of  law/

Also recently  vat  has  been amended that a revised return  can be submitted?

Does this  apply to  option also.

This may please be clarified by readers pl.

 2 Replies


kanagaraj (CHARTERED ACCOUNTANT)     12 June 2010


Dear chandru,

As per sub section 2 of section 6 if you choose compounding option that will be final for the entire financial year. See the sub section is reproduced below. Also you are not supposed to file Form L for one month and Form I for other month. If you doing some other business also you better switch over to Non compounding and file Form I.

(2) Any dealer, who executes works contract, may apply to the assessing authority along with

the first monthly return for the financial year or in the first monthly return after the commencement

of the works contract, his option to pay the tax under sub-section (1) and shall pay the tax during

the year in the monthly instalments and for this purpose, he shall furnish such return within such

period and in such manner as may be prescribed.


kannan (STUDENT)     21 December 2010

dear sir

rate of cst tax for lab equipment supplied by colleges and univercities for other state



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