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36A Tax deducted at source 2[(1) Any person, not being an individual or a Hindu undivided family, who is
responsible for making payment to any dealer (hereinafter in this section referred
to as “the contractor”) for discharge of any liability on account of valuable
consideration payable for the transfer of property in goods (whether as goods or in
some other form) in pursuance of a works contract, for value exceeding twenty
thousand rupees or such amount as may, by order in writing published in official
Gazette, be notified by the Commissioner from time to time, shall, at the time of
credit of such sum to the account of the contractor or at the time of payment
thereof in cash or by any other mode, whichever is earlier, deduct tax thereon at the
rate of 3[four] percent.
5[PROVIDED that the rate of deduction of tax (TDS) shall be 6% in case of
contractors not registered under this Act.]
(1A) Any contractor responsible for making any payment or discharge of any
liability to any sub-contractor, in pursuance of a contract with the sub-contractor,
for value exceeding twenty thousand rupees or such amount as may, by order in
writing and published in the official Gazette, be notified by the Commissioner from
time to time, for the transfer of property in goods (whether as goods or in some
other form) involved in the execution, whether wholly or in part, of the works
contract undertaken by the contractor, shall, at the time of such payment or
discharge, in cash or by cheque or draft or any other mode, deduct an amount equal
to 1[four] percent of such payment or discharge, purporting to be part of full
amount of the tax payable under this Act.]
3[PROVIDED that the rate of deduction of tax (TDS) shall be 6% in case of
sub-contractors not registered under this Act.]
(2) Where, on an application being made by the contractor in this behalf, the
Commissioner is satisfied that any works contract involves both transfer of property
in goods and labour and service, or involves only labour and service and accordingly,
justifies deduction of tax on a part of the sum in respect of the works contract or, as
the case may be, justifies no deduction of tax, he shall, after giving the contractor a
reasonable opportunity of being heard, grant him such certificate and for such period
as may be appropriate:
PROVIDED that nothing in the said certificate shall affect liability of the
contractor to pay tax under this Act.
(3) Where any such certificate is granted, the person responsible for making
payment under sub-section (1) shall, until such certificate is cancelled by the
Commissioner, deduct tax at the rate specified in such certificate or deduct no tax, as
the case may be.
(4) The amount deducted under this section shall be deposited into the
appropriate Government treasury by the person making such deduction 4[before the
expiry of fifteen days] following the month in which such deduction is made in the
manner as may be prescribed.
(5) The person making such deduction under this section shall, at the time of
payment or discharge, furnish to the contractor from whose bills or invoices such
deduction is made, a certificate as may be prescribed in respect of the amount
deducted, the rate at which it has been deducted and the details of deposit into the
Government treasury.
1[(5A) If any person referred to in sub-section (5) fails to furnish to the contractor
the certificate of tax deduction at source within seven days of making payment or
discharge, the person shall be liable to pay, by way of penalty, a sum of one hundred
rupees per day from the day of making payment to the contractor or discharge until
the failure is rectified:
PROVIDED that the amount of penalty payable under this sub-section shall
not exceed twenty thousand rupees.]
(6) Any deduction made in accordance with the provisions of this section and
credited into the appropriate Government treasury shall be treated as payment of tax
on behalf of the person from whose bills or invoices the deduction has been made,
and he shall claim the adjustment towards the payment of output tax of the amount so
deducted in his return for the tax period in which certificate of such deduction was
issued to him.
(7) A dealer claiming adjustment in his tax return of the amount deducted under
this section shall preserve the certificate issued to him for a period of seven years and
shall produce the same to the Commissioner on demand.
(8) If any person as is referred to in this section fails to make the deduction or,
after deducting fails to deposit the amount so deducted as required in this section, the
Commissioner may, by order in writing, direct that such person shall pay, by way of
penalty, a sum not exceeding twice the amount deductible under this section besides
tax deductible but not so deducted and, if deducted, not so deposited into the
appropriate Government treasury.
(9) Without prejudice to the provisions of sub-section (8), if any person fails to
make deduction or, after deducting, fails to deposit the amount so deducted, he shall
be liable to pay simple interest at the annual rate to be notified by the Government on
the amount deductible under this section but not so deducted, and if deducted, not so
deposited from the date on which such amount was deductible to the date on which
such amount is actually deposited into the appropriate Government treasury.
(10) Where the amount has not been deposited after deduction such amount
together with interest and penalty referred to in sub-section (8) and sub-section (9)
shall be a charge upon all the assets of the person concerned and recoverable as
arrears of land revenue.
(11) Every person responsible for making deduction of tax under this section
shall apply to the Commissioner for a Tax Deduction Account Number within the
prescribed time and in the prescribed form and shall also furnish a return in the
prescribed form within the prescribed period 2[, and in the manner as may be notified
by the Commissioner] :
PROVIDED that, unless intimated otherwise by the Commissioner, every
person having obtained Tax Deduction Account Number under the Delhi Sales Tax
on Works Contract Act, 1999 (Delhi Act 9 of 1999) shall be deemed to have obtained
a Tax Deduction Account Number under this Act and shall use the same Tax
Deduction Account Number under this Act.
(12) Any person who fails to comply with the requirement under sub-section (11)
shall be liable to pay, by way of penalty, a sum of two hundred rupees per day from
the day on which requirement arose until the failure is rectified:
PROVIDED that the amount of penalty payable under this sub-section shall
not exceed twenty thousand rupees.
Explanation. - Nothing contained in this section shall apply to works
contract executed in the course of inter-state trade or commerce or outside the state,
or in the course of import into or export out of India.]
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