Vidhi Codex

section 7

Deduction of tax at source

The Delhi Sales Tax on Works Contracts Act, 1999
Tax199919 sections7 chapters
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Chapter II Chapter II

Statutory text
  1. (1) Every person, other than an individual and Hindu undivided family responsible for making payment to any dealer (hereinafter referred to as "the contractee") 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 contract shall at the time of credit of such sum to the account of the contractor or at the time of making such payment to the contractor either in cash or in any other manner, deduct an amount equal to two percent from such sum towards the tax payable under this Act.
  2. (2) Without prejudice to the provisions of sub-section (7), 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 rate of two per cent per month on the amount deductable under this section but not so deducted and, if deducted, not so deposited from the date on which such amount was deductable to the date on which such payment is actually deposited.
  3. (3) 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 the transfer of property in goods (whether as goods or in some other form) involved in the execution, whether wholly or in part of 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 two percent of such payment or discharge, purporting to be part or full amount of the tax payable under this Act: Provided that no deduction under this sub-section shall be made on the amount on which deduction has been made under sub-section (1), or sub-section
  4. (3) subject to production of a certificate as prescribed in sub-section
  5. (5) of this section. (3A)
    • (i) A contractor with respect to the contracts other than the private contracts, may make an application to the concerned assessing authority authorising him to deduct tax at the rate of two percent towards the tax payable under this Act instead of two percent as provided in sub-section
  6. (1) of this section.
    • (ii) Where an application is made by the contractor under clause
    • (i) of this sub-section, and a copy thereof is forwarded to the appropriate assessing authority by the contractor, the contractor shall be deemed to have opted for composition under section 6 of this Act.
    • (iii) A contractor, to whom the provision of clause
    • (i) of this sub-section applies, may be assessed in a summary manner on the basis of the annual return filed by him without being called upon to produce the books of accounts and other records relating to his business.
  7. (4) The amount deducted under sub-section
  8. (1) or sub-section
  9. (3) shall be deposited into the government treasury by the person making such deduction within fifteen days following the month in which such deduction is made in the manner as may be prescribed.
  10. (5) Any person making such deduction under sub-section
  11. (1) or sub-section
  12. (3) shall, at the time of making such payment or discharge, furnish to the dealer or contractor from whose bills or invoices such deduction is made a certificate in such form as may be prescribed in respect of the amount so deducted, the rate at which it has been deducted and the relevant assessment year.
  13. (6) Any deduction made in accordance with the provisions of this section and credited into the 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 credit shall be given to him for the amount so deducted on the production of the certificate, referred to in sub-section
  14. (5) above, in the assessment made for the relevant assessment year: Provided further that where any deduction has been made by a contractor from the payments made to his sub-contractor in accordance with sub-section
  15. (3) the amounts of such payments shall be deducted from the amount on which tax deduction is to be made under this sub-section by the contractee at the rate as prescribed in sub-subsection
  16. (1) of section 7: Provided that 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 or export out of India.
  17. (7) If any person, as is referred to in sub-section
  18. (1) or sub-section
  19. (2) or sub-section
  20. (3) or sub-section (3A), fails to make the deduction, or, after deducting, fails to deposit the amount so deducted as required by sub-section (4), the assessing authority may, after giving to such person an opportunity of being heard, 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 Government treasury.
  21. (8) (Omitted / Not applicable)
  22. (9) Where the amount has not been deposited after deduction, such amount together with interest and penalty referred to in sub-section
  23. (7) and sub-section
  24. (8) shall be a charge upon all the assets of the person concerned and recoverable as arrears of land revenue.
  25. (10) 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 an annual return in the prescribed form within the prescribed period.

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