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)
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(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
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(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.
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)