Chandigarh, May 14 UNI | 3 months ago

The Haryana cabinet today approved an optional lumpsum composition scheme for developers who are engaged in construction of building and flats for sale.


The cabinet, which met under the Chairmanship of Chief Minister Bhupinder Singh Hooda here, also gave approval for revising the lumpsum rate for work contractors other than developers and revising TDS rate from four per cent to five per cent under the Haryana VAT Act 2003.

The developers opting for this lumpsum scheme would be required to pay lumpsum tax at the rate of one per cent on total value received by them by treating them as non VAT dealers. They will not be eligible for claims under any input tax credit nor entitled to claim any refund or issue any tax invoice.

Under the Value Added Tax 2003, the developers who are engaged in construction of buildings and flats and sale thereof are liable to pay tax as work contractors. However, they were finding it difficult to calculate the correct tax liability and to charge VAT from the buyers. There has been request from the developers in the state to float a lumpsum scheme in Haryana for this purpose.

Haryana Value Added Tax Rules, 2003 contains an optional lumpsum composition scheme providing tax rate of four per cent for work contractors. This four per cent rate scheme was introduced when the lower tax rate was four per cent under the Act. Now when the lower tax rate stands revised to five per cent from February 2, 2010, the present tax rate of four per cent for work contractor has been revised to five per cent. The payment of tax by work contractor has to be made monthly instead of quarterly. The period of 90 days given to a contractor to opt out from the lumpsum scheme has also been revised to 15 days.

Similarly, the rate of tax prescribed for deduction at source in case of payment to be made to a work contractor by a contractee has been revised to five per cent to bring parity with tax rate. The Haryana Value Added Tax Rules 2003 has been amended accordingly.

(Posted on 15-05-2014)