30 July 2010

MVAT Composition scheme for Builders and Developers Notified

VAT Composition Scheme for Retailers under MVAT
Composition Scheme for Work Contract In Maharashtra Value Added Tax 2002 (MVAT Act, 2002)

Maharashtra State Finance minster had in his budget speech announced that a simplified composition schemes for levy of MVAT on builders and developers would be introduced. That tax would be levied of one percent VAT and would be payable on the contract price of flats mentioned in the agreement of sale. However, such builders and developers will not be eligible for set off under the VAT Act. This scheme shall come into force for the agreements registered after 1st April 2010.

Subsequently provision for MVAT Act were amended and section 40(3A) was inserted by Mah Act No XII of 2010 dated 29-4-2010 w.e.f. 1-4-2010

Section 40(3A) empowers the State Government to notify by publishing in Official Gazette, i) a scheme of composition for the registered dealers who undertake the construction of flats, dwelling or buildings or premises and transfer them in pursuance of an agreement along with the land or interest underlying the land and ii) prescribe the rate of tax by way of composition, in lieu of the amount of tax payable on the transfer of goods (whether as goods or in some other form), in execution of such works contracts by such registered dealer under this Act.

Now vide notification No. VAT. 1510/CK-65lTaxation-1 dt. 9th July, 2010, the State Government has notified such scheme.

Composition scheme for Builders and Developers

  1. The scheme is available to a registered dealer who undertakes the construction of flats, dwellings or buildings or premises and transfer them in pursuance of an agreement along with land or interest underlying the land .
  2. Rate of MVAT payable : 1% of
    1. aggregate amount specified in the agreement or
    2. value specified for the purpose of stamp duty in respect of agreement under Bombay Stamp Act, 1958, …….. whichever is higher
  3. Conditions.
    1. All agreements which are registered on or after 1st April, 2010 can be covered under composition. Registration of agreement is must. Agreements entered before 1st April, 2010 but registered on or after 1st April, 2010 will be eligible to be offered under composition scheme;
    2. The claimant dealer (dealer claiming benefit of composition scheme) should included the agreement value in turnover of sale in the period in which agreement is registered
    3. The claimant dealer should make e-payment of MVAT payable against such agreements for the purpose of filing return;
    4. The claimant dealer will not be entitled to any set-off of taxes paid in respect of purchases of goods used against opted works contract;
    5. The claimant dealer must not used any goods or property in goods purchased from out of the state against C-Form for the purpose of contract for which composition of tax is opted. i.e. in relation to flat, dwelling, etc against which he is paying tax under composition scheme, he must not used goods purchase against C-Form.
    6. The claimant dealer shall not issue declaration in Form 409 to sub-contractor in respect of work contract for which composition is opted;
    7. The claimant dealer shall not be entitled to change the method of computation of tax liability in respect of contract for which he has opted fur this composition scheme;
    8. The claimant dealer shall not issuc Tax Invoice.