The Nagaland Value Added Tax Notification, 2005
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Body Office Memorandum No. FIN/TAX/ESTT/23/96(Pt): Dated 8th July 2015.

Sub: Deduction and deposit of Tax Deducted at Source (TDS) by Government Departments, Establishments and Undertakings etc. on account of Works Contract, Purchases, Sales and Supplies affected by them.

The revenue generated by means of Tax Deducted at Source (TDS) on account of works contract, purchases, sales and supplies affected by Government departments, establishments and undertakings forms a major portion of the States' revenue receipt.

Under the Nagaland Value Added Tax Act, 2005, the AHoD, HoD, DDO etc. are responsible for correct deduction and deposit of TDS from works contract or purchases or sales or supplies of goods affected by them. Any authority failing to deduct and deposit the TDS shall, as per law, be personally liable for penalty, not exceeding twice the amount required to be deducted.

In this connection, Taxes Department has been instructed to carry out test check of some select departments to ascertain whether VAT due and payable to the Government is being deducted and deposited into the Government account correctly by the concerned departments.

For better understanding of the process of TDS, a step by step guide for officers responsible for effecting TDS is attached herewith. The concerned local office of the Taxes Department may also be contacted for any clarification or the departmental website www.nagalandtax.nic.in may be accessed for required information, especially with regard to prevalent rates of taxes.

All concerned are requested to comply with the above.

(Tejmon Toy)

Principal Secretary & Finance Commissioner

Step by Step guide for Authorities/person responsible for effecting Tax Deduction at Source (TDS)

Duties and Responsibilities of person responsible for making any payment to dealer in respect of any works contract, lease or sale or supply of goods.		Relevant Sections/Rules	Prescribed timelines	Penalty
		Section 92(3){iv)	NA	NA
1	No Authority/Person responsible for making payment in respect of any works contract, lease or sale or supply of goods shall enter into any transaction/ contract unless the dealer (contractor, leaser, seller or supplier) produces a copy of the VAT Registration certificate or furnishes an undertaking for getting himself/herself registered.
2	Authority entering into such contract with any dealer shall provide detail information in Form VAT-40 (Rule 48 (8) to the concern Superintendent of Taxes under whose jurisdiction the dealer's place of business is situated.	Section 92(3)(iii) and Rule 48 (8)	Within 15 days from the date of signing of the contract	Failure to do so shall entail a penalty not exceeding Rs500/-per day of default.
3	Every Authority/person referred to in clause (i) of sub-section 3 of section 92 responsible for making payment shall within the prescribed time, apply to the concern Superintendent of Taxes for allotment of a Value Added Tax Deduction Number in Form VAT-41. The VAT Deduction Account Number shall be issued by the Tax Department in Form VAT-42. The number shall be quoted in such documents, statements and returns as may be prescribed.	Section 92(3)(v) and see Rule 48 (10)(a)&(b)	Within 30 days from the date of commencement of these Rules
4	No Authority shall make any payment to any dealer before he/she gets himself/herself registered and produces an authenticated copy of the certificate of registration.	Section 92(3)(iv)
5	Where the a contractor produces a Certificate of deduction of tax at source for a lower amount or for no deduction of tax under clause (ii) of sub-section 3 of section 92 in Form VAT-39 duly issued by the concern Superintendent of Taxes, the authority/person responsible for payment shall make the deduction of tax in accordance with the said certificate. Such certificate shall invariably be embodied in each bill to be presented for payment.	Section 92(3)(ii) (a) and See Rule 48 (7) (c) & 9.
6	The Authority shall, at the time of payment of such sum to any dealer for execution of a works contract or supply of goods, deduct an amount towards tax at the rate prescribed in respect of such works contract or supplies.	Section 93(2)(i)		Where any Authority or person, while paying any sum to a dealer fails to properly deduct and deposit the TDS as mandated by the Act, he/she shall be personally liable for Penalty not exceeding twice the amount to be deducted
7	The Authority shall deduct the tax on works contract at the option of the contractor to either- (a) To pay by way of composite rate of 4.75% on the total value of the works contract, or (b) Pay @ 13.25% on the total value of the works contract with deduction on account of labour and services charges subject to the maximum up to 65% of the total value of the works contract	Section 12 (5)
8	The Authority shall deduct the tax on supply of goods at the rates, as amy be prescribed in the Schedules by the state Govt. from time to time. The rate can be viewed at www.nagalandtax.nic.in	Section 12 (4)
9	The Authority shall deposit the deducted amount into the respective Govt. Treasury/designated bank in Form VAT-9	Rule 44 (1) & 48 (1)	Within 10 days from u days from the expiry of the calendar month
10	Where the authority making such deductions adopt "Public Work system of Accounting", such authority shall, incorporate the sum so deducted in the "Monthly Divisional Account Statement" and send the said statement to the Accountant General, Nagaland, for transfer of the sum to the account under the head of account 0040-Sales Tax.	Rule 48 (3)	within 10 days from the expiry of the calendar month
11	Authority making such deposit shall issue a 'Certificate of deduction' in Form VAT-32 to the dealer and maintain for each year account m Form VAT-43 showing the amount of tax deducted, certificate of tax deduction issued, and the particulars of remittances made against such deduction.	Rule 48 (5), (10)(c)	within 15 days from date of such deduction
12	The Authority who deducts the amount towards payment of tax in respect of works contract or supplies shall, shall send to the Commissioner of Taxes, Nagaland, Dimapur (i) a Scroll in Form VAT-33, (ii) a copy of Certificate of Deduction issued to each dealer, and (iii) a copy of the receipted Challan or a copy of the Monthly Divisional Account Statement.	Rule 48(6)	Within 45 days from the date immediately following the date of expiry of the calendar month.

•For any further information/clarification, please visit your nearest District Tax Office or the department's web portal at www.Nagalandtax.nic.in

Where any works contract is separable and involves both transfer of property in goods and labour services, or involves only labour and services and accordingly, justifies deduction of tax on a part of the sum payable in respect of any works contract or as the case may be no deduction of tax at all, the dealer can made and application in Form VAT-38 (Rule 48 (7)(a) in this behalf to the prescribed authority for grant of Certificate of tax at source or no deduction of tax.

Department

The Tax Authority after making such enquiry as it may deemed necessary, is satisfied that the particulars document furnished by the dealer are correct and complete in all respect, shall Grant Certificate in Form VAT-39 within a period of one Month from the date of receipt of the application. And shall forward a copy of such certificate to the contractee for whom the work executed. Rule 48 (7) (c)