I           Applicability

A contractor liable to pay tax under HVAT Act may, in respect of a work contract awarded to him for execution in the State, pay in lieu of tax payable by him under the Act on the transfer of property (whether as goods or in some other form) involved in the execution of the contract, a lump sum tax.

II          Rates

Lump sum tax shall be calculated at 4% of the total valuable consideration receivable for the execution of the contract.

III        Conditions

(i) Contractor opting this scheme shall make an application to the appropriate assessing authority within 30 days of the award of the contract to him, containing the following particulars:

Name of the applicant contractor;

TIN; (Append application for registration, if not registered or not applied for registration);

Name of the contractee;

Date of award of the contract;

Place of execution of the contract;

Total cost of the contract;

Period of execution,

            and appending therewith a copy of the contract or such part thereof as relates to    total cost and payments.

(ii) The application shall be signed by a person authorised to make an application for registration.

(iii) On receipt of the application, the assessing authority shall, after satisfying itself that the contents of the application are correct, allow for the same.

(iv) The lump sum contractor shall be liable to make payment of lump sum quarterly calculated at 4% of the payments received or receivable by him during the quarter for execution of the contract. The payment of lump sum so calculated shall be made within 30 days following the close of the quarter after deducting therefrom the amount paid by the contractee on behalf of the contractor under section 24 for that quarter. The treasury receipt in proof of payment made and certificate of tax deduction and payment obtained from the contractee shall be furnished with the quarterly return.

(v) The lump sum contractor shall be entitled to make purchase of goods for use in execution of the contract both on the authority of declaration in Central form C as well as Form VAT-D1.

(vi) The lump sum contractor shall file returns at quarterly intervals in Form VAT-R6 within a month of the close of the quarter and shall pay lump sum tax due from him.

(vii) The lump sum contractor shall maintain complete account of, declarations in Central form C and Form VAT-D1 used by him and, the utilisation of the goods purchased on the authority of these forms. He shall be required to make use of declaration in Form VAT-D3 for carrying goods of which he shall keep account.

(viii) A lump sum contractor shall have to pay lump sum in respect of every works contract awarded to him after the award of the contract in respect of which he first elected to pay lump sum and he shall continue to pay tax in respect of contracts awarded before as if he is not a lump sum contractor.

IV        Can the Contractor Opt-Out of the Scheme?

(i)     A lump sum contractor may at any time by appearing before the appropriate assessing authority himself or through an authorised agent express in writing his intention to opt out of the scheme.

(ii)   A lump sum contractor may, when rate of lump sum is revised, opt out of the scheme of payment of lump sum in lieu of tax payable under the Act by appearing before the appropriate assessing authority himself or through an authorised agent within 90 days of such revision and expressing in writing his intention to opt out of the scheme of payment of lump sum.

V          General principles of this scheme

(a)               Lump sum tax payable shall be deemed to be tax for the purpose of application of provisions relating to assessment, use of declarations and maintenance of record relating thereto, levy of interest, imposition of penalties for offences committed under the Act, and recovery.

(b)               Once an option to pay lump sum has been exercised, it shall not be withdrawn until

Ø      the rate of lump sum is revised; or

Ø      The rate of tax on goods which the lump sum dealer deals in are revised.

and the lump sum dealer makes an application within 15 days of the date of the publication of the notification that he does not wish to pay lump sum at the revised rate.

(c)                A lump sum dealer shall not issue a tax invoice.

(d)               The input tax in respect of goods purchased by any dealer from a lump sum dealer shall be nil.

(e)                No Surcharge under section 7A shall be applicable in this case.

All form fields are required.