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DELHI TAX COMPLIANCE ACHIEVEMENT SCHEME, 2013 HIGHLIGHTS & FAQs
November, 13th 2013
                 DELHI TAX COMPLIANCE ACHIEVEMENT SCHEME, 2013
                                         HIGHLIGHTS & FAQs

                                             Abbreviations used:
       (i)        DSC (or) Scheme : Delhi Tax Compliance Achievement Scheme/Voluntary VAT
                  Amnesty Scheme(VVAS)
       (ii)       DVAT Act : Delhi Value Added Tax Act, 2004
       (iii)      CST Act : Central Sales Tax Act, 1956
       (iv)       DST Act: Delhi Sales Tax Act, 1975
       (v)        WCT Act : Delhi Sales Tax on Works Contract Act, 1999
       (vi)       RTU Act: Delhi Sales Tax on Right to Use Goods Act, 2002
       (vii)      ET Act : Delhi Tax on Entry of Motor Vehicles into Local areas Act, 1994
       (viii)     VATO : Value Added Tax Officer and Sales Tax Officer
Notes - In this Paper -:
  1.           In this Paper, "Notice of Assessment/Penalty" under the DVAT Act has been considered
               and titled as "Assessment Order"; and Objection as "Appeal".
  2.           In this paper, the term "declared tax" means amount disclosed/surrendered and
               amount settled (where assessment order has been issued) under this Scheme. The term
               "declarant" means the person, who has declared tax.


                             OBJECTIVE AND SCOPE OF THE SCHEME

A. Improve Self-Compliances:
        Where assessment order has NOT been issued, the declarant (including trader,
manufacturer, contractor, builder, leasing company, etc.) shall pay only declared tax (for the period
up to 31.03.2013); and get immunity from interest, penalty and prosecution. Circumstances, such
as,-
       (i)      Dealer failed to obtain registration and pay tax;
       (ii)     Rate of tax has been wrongly charged by the selling dealer;
       (iii)    Sale has not been disclosed/under-disclosed in the DVAT / CST Act
       (iv)     Input tax credit (ITC) has wrongly been claimed by the purchasing dealer;
       (v)      Credit Note/Debit Note, including bulk discounts, have not been accounted for.
       (vi)     Central sale has been stated as local sale or vice a versa, resulting in tax deficiency;
       (vii) In case of central sales against Form C or other declaration forms, the declarant is not
             expecting central declaration forms from purchasing dealers;
       (viii) Matter is pending in assessment, audit or special audit and the assessment order has
              not been framed by VATO;
                  Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
      (ix)     Goods, paper and other accounts are seized by enforcement team, in inspection, survey,
               search or seizure, carried before 31.3.2013 or for period upto 31.03.2013, where the
               declarant expects some tax deficiency;
      (x)      TDS has not been deducted u/s 36A of the DVAT Act;

B. Disputes Settlement
             Where the assessment order has been issued by the Department, the declarant shall
             pay tax and interest as stated in such order/notice.
             The order must pertain to a period before and up to 31.3.2013, and tax has not been
             paid up to 31.8.2013.
             The assessment order might be issued under the DVAT Act, CST Act, DST Act, WC Act,
             RTU Act, or ET Act.
             The dispute may or may not be pending before any higher forum including the DVAT
             Tribunal or the High Court or the Supreme Court.
             The declarant is eligible even if no appeal has been filed against that order so far.
             The declarant will get immunity from payment of interest from the date of order till
             the date of declaration, penalty and prosecution under the Act.


                                  IMPORTANT DATES & PERIODS

12.09.2013              Enactment of section 107 of the DVAT Act empowering the Government to
                        introduce this Scheme
20.09.2013              Date of Notification of the Scheme and its coming it into force
Up to 31.03.2013 Eligibility: Period for which tax dues might be declared or paid
31.08.2013              Eligibility: Tax dues up to 31.3.2103 has not been paid or only partly paid by
                        31.08.2013
31.01.2014              Last date of payment of at least 50% of declared tax and filing of declaration
                        in Form DSC-1 under this Scheme
21.03.2014              Last date of payment of remaining amount of declared tax, if any


                                   COMPUTATION OF TAX DUES

 S.N.               Nature of Tax Dues                           Procedure of Calculation
  1          Other than Works Contractors:             Commodity wise taxable turnover in the tax
             Dealers, whether registered or         period in respect of which declaration to be made
             not, under the DVAT Act or the CST                             (X)
             Act on whom assessment order has
                                                         Rate of tax applicable for that tax period
             not been served by VATO




                                                                                                        2
                    Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

S.N.                  Nature of Tax Dues                        Procedure of Calculation
 2          Works     Contractors:  Dealers,        (a) Works contractors engaged in construction,
            whether registered or not, under            of complex, building, etc., for sale to a buyer
            the DVAT Act or the CST Act on              before construction is complete, where
            whom assessment order has not               value of land is included in total
            been served by VATO                         consideration: @1% of total consideration
                                                        (including labour & services);
                                                    (b) Other works contractors, including the
                                                        dealers stated at Sl. No. (a), who opt to
                                                        exclude the value of land as per Rule 3 of the
                                                        DVAT Rules;       @ 3% of total turnover
                                                        (including value of labour and services).
 3          Dealers registered under the DVAT         As stated at Sl. No. 1 or 2, as the case may be
            Act or the CST Act on whom
            assessment order has been served
            on certain issues, but declaring tax
            dues on different issues
 4          Dealers including works contractors,    Aggregate of amount of tax and interest stated in
            registered under the DVAT Act, CST       the assessment order (exclude penalty, if any)
            Act DST Act, WC Act, RTU Act or ET                            (less)
            Act on whom assessment order has
                                                     Amount already paid by the dealer towards the
            been served
                                                                    said demand.
 5          Persons required to deduct tax at        3% of total sum paid or credited by the person
            source u/s 36A of the DVAT Act          for discharge of any liability for the execution of
            (TDS)                                   works contract or the amount actually deducted,
                                                                   whichever is greater
                                                                          (less)
                                                    Amount already deposited towards such discharge

        Manner of calculation of tax dues by the works contractor, being the builders:
        Transactions of builders may be divided in two parts: -
     (i)      Activity carried by the builder for the land owner, that is, determination of value of
              works contract for the land-owner where consideration has been received by the
              builder in the form of land : Here the value of land shall be determined as per newly
              inserted Rule 3(1A) of the DVAT Rules;
     (ii)     Activity carried on by the builder for the intended buyer (booking of property/unit
              before completion of construction by the builder): Builder has two options, namely -
              (a)     Pay tax @1% of total consideration, including the value of land, receivable/
                      received from the intended buyer; or
              (b)     Pay tax @ 3% of total turnover (including value of labour and services) as reduced
                      by the value of land determined in accordance with the recently amended Rule
                      3(3) & (4) of the DVAT Rules.
        The Government has amended Rule 3 of the DVAT Rules vide Notification No.
        F.3(16)Fin(Rev-I)/2013-14/ds VI/785 effective from 20.09.2013. This Rule facilitates the
        works contractor to determine his taxable turnover.
        Adjustment of input tax credit from declared tax dues
                                                                                                          3
             Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
      The input tax credit cannot be adjusted against payment of tax dues under VVAS.
      Accordingly, entire tax dues under the Scheme shall be paid in cash through the normal e-
      payment method.
      Adjustment of `excess tax credit' or `carry forward amount' from declared tax dues
      There are no provisions for such adjustment and, thus, entire amount shall be paid by the
      declarant in cash. He shall not be entitled to adjust his carry forward amount as per the
      Returns, if any. For example, a declarant, who has carry forward amount of Rs. 10 lacs as
      on the date of declaration, declares the amount of tax dues of Rs.12 lacs under this
      Scheme. In such a case, he shall pay entire Rs.12 lacs in cash, without adjusting the carry
      forward amount of Rs.10 lacs.





                       PROCEDURE OF MAKING DECLARATION

1.      Compute the amount of tax dues in accordance with preceding Paras;
2.      If not registered under the DVAT Act (either as a dealer with TIN allotment or as a TDS
        deductor with TAN allotment), obtain registration. Also pay tax and file returns for the
        period after 1.4.2013 along with the declaration in DSC-1;
3.      Where declaration is made in relation to the tax dues against which objection/appeal/
        revision is pending before the higher forum, then-
      i.    all statutory appeals/revisions pending before quasi-judicial forums up to the stage of
            Tribunal shall be deemed to have been withdrawn once the Scheme is opted for;
      ii.   all matters pending in the High Court and Supreme Court shall be withdrawn by the
            declarant, and the declarant shall submit the copy of the application filed before the
            Court for withdrawal along with Form DSC-1;
4.      Fill the declaration in Form DSC-1 on the web-site of the Department;
5.      Pay at least 50% of amount of declared tax dues through Challan online. It may be
        noted that declarant may pay even the entire amount of tax dues at this stage;
6.      File hard copy of Form DSC-1 along with Challan to the designated authority on or
        before 31.1.2014;
7.      The designated authority shall suo-moto issue the acknowledgement in Form DSC-2
        within a period of 15 working days from the date of receipt of the declaration. If it is not
        received, then designated authority may be contacted;
8.      Pay remaining (unpaid) amount of tax dues through Challan online on or before the
        21.3.2014;
9.      Submit proof of such payment along with a copy of acknowledgement in DSC-2 (already
        received at Step No. 7) to the designated authority;
10.     Obtain Form DSC-3 from the designated authority: On furnishing the details of full
        payment of declared tax dues, the designated authority shall issue an acknowledgement
        of discharge of such dues within 15 days in Form DSC-3;
11.     A declaration made under this Scheme shall become conclusive upon issuance of Form
        DSC-3 by the designated authority.
12.     Amount paid under this Scheme will not be refunded under any circumstances;



                                                                                                  4
            Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
 13.   If fails to pay the tax dues, either fully or in part, after making declaration, such balance
       dues along with interest thereon shall be recovered under the provisions of DVAT Act.


                          IMMUNITIES UNDER THE SCHEME

A. Immunities, where assessment order has NOT been issued:
       Immunity from interest in relation to declared tax
       Immunity from penalty in relation to declared tax
       Immunity from prosecution
       Immunity from any other proceedings in relation to declared tax
       If not already registered under the Act:-
       ­   Immunity from penalty of late registration
       ­   Immunity from interest for late payment of tax for the period after 1.4.2013
       ­   Immunity for late filing of returns for the period after 1.4.2013
       A declaration made under this Scheme shall become conclusive upon issuance of Form
       DSC-3, and no matter shall be reopened/reassessed/reviewed thereafter in any
       proceedings under this Scheme or the Act before any Authority or Court relating to the
       period covered by such declaration to the extent of tax dues declared by the declarant;
       The information gathered vide a declaration under the Scheme shall be kept
       confidential, and shall not be used except under the Scheme and the same shall not be
       shared with any other person / government department / agency.

B. Immunities, where assessment order has been issued:
       Immunity from interest in relation to declared tax for the period after issuance of
       assessment order till the date of declaration
       Immunity from prosecution
       Immunity from penalty or any other proceedings in relation to declared tax

C. No Immunities under this Scheme:
       Interest stated in the assessment order
       Interest and penalty not related to declared tax
       Penalty which has no relation to tax deficiency. For example, where penalty has been
       imposed for late filing of Returns or other documents or for non-maintenance of stock
       records, etc, such cases would not be covered within the scope of VVAS.




                                                                                                  5
              Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs




                                    FALSE DECLARATION
         Where the Commissioner has reasons to believe that the declaration was false in material
particular, he may serve notice on the declarant, within one year from the date of declaration, in
respect of such declaration. He may require the declarant to show cause why he should not be
required to pay the tax dues unpaid or short-paid as per provisions of the Scheme.
        If the Commissioner is satisfied that the declaration made by the declarant was
substantially false, then benefit of this Scheme shall not available to the declarant. Such declarant
may be proceeded u/s 89(2) of the Act for furnishing of false declaration.


                                       MISCELLANEOUS

DSC/VVAS introduced by the Delhi Government is certainly an innovative and futuristic Scheme. It
would increase the number-base of the dealers registered with the DVAT Department; and help in
reducing existing disputes/litigations. Inspite of few issues already discussed, it is a welcome move.

Disclaimer:
This paper is an attempt to answer the frequent queries in a simple language. However, for authentic
legal interpretation please refer to the scheme Notified vide No. F.3(16)Fin(Rev-I)/2013-14/ds VI/786
                                            dated 20.09.2013




                                                                                                    6
          Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

                       FREQUENTLY ASKED QUESTIONS


Enforcement Survey

Q1.   What is the procedure for evaluating the amount to be paid wherein
      enforcement survey/seizure of goods/ papers have been made or where the
      notice of audit has been issued?

      If the dealer wants the estimated tax dues to be evaluated he may contact the
      helpdesk      under    supervision     of   Sh.    C.    Arvind,   Additional
      Commissioner      (T    &    T).    Tel.   No.    011-23705434;    email    -
      actt.amnesty.scheme@gmail.com


Q2    In case of survey cases where default assessment is pending, and where advance
      cheque has been collected by the enforcement team at the time of survey and
      encashed; can such advance payment be adjusted from the amount of tax
      deficiency stated by the team in its report? If yes, where the amount of advance
      tax is more than the tax dues, can that excess payment be carry forward by the
      declarant and adjusted from his future tax liability?

      Yes, the advance tax collection can be adjusted by the declarant from his tax
      dues. Any excess payment can also be adjusted from his future VAT liability.
      However, he shall file the relevant details along with the DSC-1.

      Also, what about the case where the dealer admits his tax liability and deposits
      the same within 3 days of the survey?

      It would not be applicable since section 87(6) was inserted w.e.f. 1.4.2013; and
      the amnesty scheme covers the tax dues upto 31.3.2013.



Assessment/Audit/Special Audit

Q3.   Since dealers can declare under the VVAS upto 31 st January, 2014, whether
      assessment / audit / special audit / objection/ appeal / recovery proceedings of
      the Department will continue during the period of VVAS i.e. upto 31.01.2014 ?

      Yes. There is no guarantee that the dealer will opt for VVAS and hence, the
      Department will continue with assessment / audit / special audit / objection/
      appeal / recovery proceedings in the normal course and if the proceedings all
      completed then the dealer will need to pay the assessed tax with interest.
      Hence, it is in the interest of the dealer to declare and avail the benefit under
      VVAS at the earliest and in any case on or before 31.01.2014.

                                                                                     7
             Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

Q4.    If the notice of assessment has been issued and the dealer is not disputing the
       tax and interest and has already paid the same what would be the procedure for
       claiming benefit of waiver of penalty under Amnesty Scheme?

       The dealer can file DSC-1, along with proof of payment of tax and interest, to
       avail the benefit.

Q5.    Can VVAS be applied for part of the assessment order/notice of assessment?

       No. Under VVAS, the dealer would be required to pay the entire assessed tax and
       interest.
Q6.    There are instances of more than one rate of tax for the same/similar goods
       depending on sale value or other differentiation. Can we get an illustrative list of
       goods with more than one rate of tax?


       To ascertain the rate of tax on goods, the dealers are advised to refer section 4,
       section 6 and the Schedules appended to the Delhi Value Added Tax Act, 2004.
       An illustrative list of goods with more than one rate of tax is given below:-


       Sl.       Commodity              Rate of Tax                Rate of Tax
       No.
      1.       Watches            Costing upto Rs. 5000 ­ Costing above Rs. 5000
                                  12.5%                   ­ 20%
      2.       Printers           Normal Printers - 5%       Multi-functional
                                                             printers ­ 12.5%
      3.       Garments           Costing upto Rs. 5000 ­ Costing above Rs. 5000
                                  5%                      ­ 12.5%
      4.       Foot wears         Costing upto Rs. 500 ­ Costing above Rs. 500 ­
                                  Exempt                 12.5%
      5.       Hardware and Hardware ­ 5%                    Sanitary fittings    and
               Sanitary Goods                                goods ­ 12.5%
      6.       Paper & Board      Normal paper & board Coated paper               and
                                  ­ 5%                 board ­ 12.5%
      7.       Mobile phones      Costing upto Rs. 10000 Costing   above          Rs.
                                  ­ 5%                   10000 ­ 12.5%
      8.       Electric cables    Cables having cross        Industrial cables i.e.
                                  section area of the core   Cables having cross
                                  from 0.5 to 6.0 sq.        section area of the core
                                  millimeter ­ 12.5%         above       6.0      sq.
                                                             millimeter ­ 5%


                                                                                         8
           Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

Q7.    Where an Audit notice has been issued to the dealers; and the dealer wants to
       pay tax dues under VVAS, what would be the procedure for dropping/withdrawal
       of such notice?

       The dealer could estimate the deficit tax, which has led to issuance of the audit
       notice, and pay the same along with DSC 1. Alternatively, the dealer may contact
       help desk to ascertain his estimated tax dues on payment of which his audit is
       unlikely to be pursued, unless some other aspect which is substantially adverse
       comes to notice, and pay the same with DSC 1.

Q 8.   Can a dealer pay a single/ consolidated amount against his estimated tax dues in
       context of his tax dues for the multi-year audit or multi-year special audit
       ordered against it; or otherwise?

       Yes, the declarant can pay tax dues through single challan and file one DSC-1 for
       the consolidated amount. However, the declarant shall furnish tax period wise
       details of tax dues along with DSC-1.

Returns

Q9.    If a dealer has defaulted in filing return and has paid tax late what will be the
       procedure for applying under Amnesty Scheme and return filing?

       The dealer should file online return as per the normal procedure and apply in
       DSC1 separately for availing waiver of interest and penalty relating to the tax
       deficiency only. The dealer will, however, have to pay tax first, along with proof
       of the same, to claim the benefit under Amnesty scheme.

Objection/Appeal

Q10.   Where objection or Appeal has been partly allowed and case has been
       remanded, what would be the procedure for VVAS?

       The dealer will have to get the remanded case assessed and then avail benefit
       under the Scheme on the basis of revised order. He may contact the concerned
       Zonal Additional/ Joint Commissioner to get the remanded order passed at the
       earliest.

Q11.   Appeal filed before the High Court and Supreme Court cannot be withdrawn
       unless DSC-3 is issued. And it would not be possible to withdraw appeal before
       acceptance of VVAS. Can revised guidelines be issued in this regard?

       After the declarant dealer has paid the full tax and interest, as applicable, under
       the VVAS, the Department will issue a letter of intent of issuing DSC-3. After
       dealer files copy of application of withdrawal of Court case, the Department will
       issue DSC-3. However, this DSC-3 will get confirmed only when the case is finally
       withdrawn.




                                                                                        9
           Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

Q12.   In case of remand assessment, the interest is levied upto the date of remand
       order. Suppose the total demand of a dealer is 2 lacs; and the OHA has granted
       partial relief of 10,000/ and remitted the matter to the AC(VAT) for the
       remaining part of the assessment order. However, in remand assessment, to
       claim the benefit of this 10,000/-; the dealer might have to pay additional
       interest of 30,000/- (i.e. on remaining tax: from the date of original order till
       the date of remand order). In such a case, can the declarant pay tax dues as per
       the original assessment order, without getting the remand assessment done as
       directed by the OHA?


       Once the remand assessment order is passed, the original order gets merged in
       the remanded order and loses its identity; therefore, declarant shall pay tax dues
       stated in the remand assessment order.

       However, where the objection is partly allowed but remand assessment has not
       been framed till the date of declaration, the declarant can pay tax dues as per
       the original assessment order, provided the declarant pays full tax and interest
       as per earlier assessment order and not a part of it.

Penalty
Q13.   Where tax and interest have been admitted, and paid; however, penalty is under
       challenge: Can VVAS be applied for amount of penalty in relation to such tax? If
       yes, how DSC-1 to be filed since nothing would be payable?


       Yes, the dealer can file DSC-1, along with proof of payment of tax and interest, to
       avail the benefit.



Q14.   Where amount of tax and interest is Rs. 10,000/- and penalty is Rs. 5,000/-. The
       dealer has already paid Rs.12,000/-. How would DSC-1 be filled since there is
       excess payment of Rs.2,000/-?

       The penalty paid/ partly paid prior to the date of notification of the Scheme will
       not be allowed to be adjusted. The amnesty benefit would be available only for
       the balance of penalty.

Q15.   Whether the amount paid towards the stay of demand of penalty can be
       adjusted towards tax dues? For example, assessment is made for an amount of
       tax and interest for 10,000/-; and for penalty - 5,000/-. The dealer deposited
       stay amount of 2,000/- towards tax; and 1,000/- towards penalty. How much
       amount would be deposited by the declarant under VVAS?



                                                                                       10
              Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

       The declarant shall pay 7,000/- [10,000/ (-) 2,000/ (-) 1,000/] under VVAS; and
       get immunity from payment of penalty of 5,000/-.


Registration
Q.16   a) Whether a dealer, whose registration has been cancelled due to any reasons,
          has neither deposited tax nor furnished return after cancellation, can opt for
          the amnesty scheme simply by paying the tax dues under the scheme?

       b) Will there be any difference if the objection/appeal against the cancellation
          order is pending?

       c) If yes, what will be the procedure?

       No. There is no provision of summary disposal of restoration application under
       amnesty scheme. The restoration process has to be through objection only.
       Moreover, suo-motto cancellation of registration is done in rare cases due to
       serious violation. Thus, summarily restoring all such cases in amnesty scheme
       without going into merits may not be possible. However, the dealer can avail of
       the amnesty scheme as unregistered dealer during the period of cancellation.
       The dealer is not expected to file the returns for the unregistered period as far as
       Amnesty scheme is concerned till he gets a new registration or his earlier
       registration is restored.

Q17.   Can an unregistered dealer/contractee, who has discontinued his business
       before 31st March 2013, pay tax dues under VVAS without getting registration
       under the Act (to avoid registration, and then its cancellation)?

       Yes, he can pay tax dues under this Scheme. However, where the dealer claims
       that he is not liable to pay tax under the Act from 1 st April 2013 upto the date of
       declaration, he shall file an affidavit in this regard along with DSC-1. In the
       affidavit the dealer/ contractee shall indicate his date of liability (date on which
       his business activities started) and the date on which he ceased to be a dealer/
       contractee.


Preparation of DSC-1
Q18.   Whether period of turnover, to which tax dues relates, would be disclosed in
       DSC-1 by the declarant?

       Yes; so that the dealer can be given the benefit of declaration for that period.

Q19.   The Builder, if opts to pay tax @3%, would claim deduction for land from GTO.
       Will he be required to furnish year wise computation of turnover along with DSC-
       1?

       Yes.
                                                                                          11
           Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

Q20.   A dealer pays tax under VVAS for the period from 1.4.2009. Would he be
       summoned for non-declaration of tax dues for the period before 1.4.2009?

       DSC-1 will discharge the dealer of his liabilities for the period/year for which it is
       filed. As per proviso to Section 34 (1) (b) of the DVAT Act, 2004, the
       Commissioner can examine non-declaration of tax dues upto six years.


Works Contract/Builder
Q21.   A contractee opts for VVAS and pays tax of 3% after obtaining registration. He is
       not required to file TDS return for the period upto 31.03.2013. His immediate
       contractor has also not filed his return.
       -   Since the language of explanation to clause 3(5) is not clear, whether
           contractor would get immunity from payment of tax, apart from interest and
           penalty?
       -   What would be the procedure to disclose the name of the contractor by the
           contractee, so that contractor could get immunity from tax, etc.?


       Yes. If one of the parties either contractee or contractor avails the Scheme and
       pays 3% tax, then both the parties will get immunity from interest and penalty
       for the particular contract/ part of contract. The contractee has to file the return
       as per the provisions of the DVAT Act & Rules wherein the name of contractor
       has to be filled up.


Q22.   It has been stated in the VVAS that double taxation has been avoided in works
       contract transaction. Where the contractee has failed to deduct TDS, but his
       contractor has paid due taxes and filed returns as prescribed, will the contractee
       get immunity under this scheme? If yes, what will be the procedure?

       Yes, the contractee can get immunity under the VVAS. For this purpose, he shall
       file DSC-1 along with copy of all returns filed by his contractor along with Form
       2B of the contractor. The contractee shall get immunity only of that turnover
       amount, which is stated by the contractor in Form 2B of his DVAT Return against
       that contractee. If the contractee does not have TAN under the Act, he shall first
       obtain TAN under the Act.

Q23.   Please explain calculation of tax in case of collaboration agreement.

      LO = LAND OWNER, BD = BUILDER DEVELOPER, IP = INTENDING PURCHASER
      LO entered into a Collaboration Agreement with the BD, for a property. The BD
      constructs four floors - two would belong to the LO and two to the BD.
   1) BD would also pay a sum of  150 to the LO (area of plot being 200 sq. yds, the
      size of original plot)


                                                                                          12
      Description                                         Turnover Tax   RateTax   under
                                                          ()       (%)       Amnesty ()
      (2)                                                          (3) & FAQs (4)
            Highlights of Delhi Tax Compliance Achievement Scheme, 2013


A     Tax on works contract carried by BD for LO (for
      two flats)
      (a) Actual value of construction ­  47.5

      (b) Circle Rate of construction ­  47.5
      (not given; assumed at  47.5)
                                                          47.5*    3          1.425
      (c) Circle Rate of Land ­ Amount paid to LO =
       195 ­  150 =  45                             (Highest
      (Circle Rate of land assumed at  195 for 50% of (a), (b),
      share of land):                               or (c))

      Notes:
      - It is assumed that separate conveyance deed
      for land has neither been executed between
      LO and BD nor between BD and PB
      (If separate conveyance deed signed, then
      value is ascertainable from the same)
      - Tax shall be payable minimum at circle rate
      of construction.
      *It is presumed that  47.5 comprises of cost
      of materials and labour and the profit earned
      on construction.


B     Tax on works contract carried by BD for IP
B.1   Two Flats sold        during   completion     of
      construction
      Step I. Calculate value of Proportionate
      Share of Land transferred to BD
      (a) Amount paid by the BD to LO (+) Value of
      construction for LO as per (A): 150/- (+)47.5
      = 197.5
      (b) If (a) is not applicable: then circle rate of
      Land ­ 195/-


      Step II. Calculate value of construction (Sale
      Value ­ Value of Land) (Sale Deed is  300/-)
      (a) If method I.(a) is adopted ­ then 300 ­ 102.5            3          3.075
      197.5 = 102.5/-


                                                                                      13
              Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

        In case where the land cost cannot be
        ascertained by above method then it will be
        calculated on the basis of circle rate of land.


B.2     Alternatively                                     (OR)
        Pay tax @1% on  300                               300       1              3


C       Total Tax                                         Tax on works contract as
                                                          calculated in (A) + tax on works
                                                          contract as calculated in (B)

In case the actual cost of construction or actual cost of land is not ascertainable from the
book of accounts, circle rates for construction or land shall be taken into account to
calculate the VAT liability.
      1) Total cost of construction for the entire property is  95 i.e.  47.5 for the
         portion of the LO &  47.5 for the BD's share.

      2) Total cost for the BD for his share comes to  150 plus  95 i.e.  245.

      3) BD sells his share for  300.




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