Uttar Pradesh VAT Rules

Tax Deduction At Source(TDS)

1. Without prejudice to any other mode of recovery, payment or collection of tax under this Act, every person responsible for making payment to the selling dealer, for discharge of liability on account of valuable consideration payable on sale of goods, shall, at the time of making such payment to the seller, either by credit or by payment in cash or in any other manner, towards satisfaction of tax payable by the dealer on account of sale of any taxable goods, deduct an amount determined in the manner and in the circumstances mentioned below :-
   • Where sale of any taxable goods is made by way of transfer of property in such goods (whether as goods or in some other form) involved in the execution of a works contract, such contract not being a building contract of such class or value as may be notified by the State Government in public interest in this behalf, an amount equal to amount of tax payable, according to rate of tax applicable to sale of such goods, on such turnover of sale of taxable goods, as may be reasonably estimated by the contractor;
   • Where sale of any taxable goods is made by an unregistered dealer under an agreement of transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration, and lessee is either a registered dealer or a person amongst following:
     1. the Central Government or any State Government; or
     2. any local authority, any corporation or undertaking established or constituted by or under a Central Act or a State Act; or
     3. any co-operative society or other society, club, company, firm or other association of persons, whether incorporated or not,

     an amount equal to the amount computed on the turnover of such sale at such rate as may be provided under section 4 in respect of such goods;

   • where in respect of a sale of any taxable goods, except a sale under clause (a) or clause (b), selling dealer liable to pay tax on such sale, is an unregistered dealer and the person purchasing such goods is either a registered dealer or a person amongst following:
     1. the Central Government or any State Government; or
     2. any corporation or under taking established or constituted by or under a Central Act or a State Act,

        an amount equal to the amount of tax payable on turnover of sale by the dealer selling such goods according to rate of tax applicable to sale of such goods;

     3. Where a registered dealer, for or on behalf of an unregistered principal, makes sale of such taxable goods, as may be specified by the State Government, by notification in the Gazette, to a registered dealer, an amount equal to tax payable on the turnover of such sale according to rate of tax applicable to sale of such goods.
2. Where-
   • a dealer selling any taxable goods under any of the clauses of sub-section (1), for any reason claims that he either is not liable to pay tax on any sale of taxable goods or is liable to pay as tax an amount lesser than amount of deduction computed in the manner provided; or
   • the person responsible for making payments to the contractor is unable to ascertain either the turnover of various goods involved in the execution of the works contract or the amount of deduction,

     the person responsible for making payment shall require the selling dealer to produce direction issued in this behalf by the assessing authority of the selling dealer and shall act according to such direction of the assessing authority.

3. Where any deduction has been made by a contractor from the payments made to his sub-contractor in accordance with sub-section (7) the amount of such payments shall be deducted from the amount on which deduction is to be made under clause (a);
4. Where purchasing dealer himself is liable to pay tax on turnover of purchase of any goods by virtue of provision under sub-section (4) of section 3, he shall not deduct any amount in respect of turnover of such goods.
5. In the circumstances under sub-section (2), the dealer selling goods may apply to the assessing authority having jurisdiction over the principal place of his business or if he has no fixed place of business, to the assessing authority in whose jurisdiction he ordinarily resides, for issue of direction to the purchaser to deduct an amount lesser than the proposed amount of tax or not to deduct any amount as tax.
6. The assessing authority referred to in sub-section (5), after examining the liability of payment of tax of the dealer in respect of sale of goods made and after giving reasonable opportunity of being heard to the dealer, shall by an order in writing direct the purchaser of the goods accordingly.
7. 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 the work undertaken by the contractor, shall, at the time of such payment or discharge, deduct an amount purporting to be full amount of the tax payable under this Act on such transfer from the bills or invoices raised by the sub-contractor as payable by the contractor:

   Provided that no deduction under this sub-section shall be made on the amount on which deduction has already been made under clause (a) of sub-section (1)

8. The amount deducted under sub-section (1) or sub-section (7) shall be deposited into the Government Treasury by the person making such deduction before the expiry of the month following that in which deduction is made:

   Provided that where the purchaser of goods under clause (c) or clause (d) is a registered dealer, he shall deposit the amount of deduction in the manner and within the time in which amount of tax for the tax period in which purchase has been made, is payable and such dealer shall be entitled to claim input tax credit in accordance with provisions of section 13 in respect of such purchase.

9. The person making deductions under any clause of sub-section (1) or under sub-section (7) shall, at the time of payment or discharge, furnish to the selling dealer a certificate of amount deducted in such form and manner and within such period as may be prescribed and shall submit such statement of all such purchases, payments and deductions made and certificates issued by him, in such manner and within such time, as may be prescribed.
10. If any such person referred to in sub-section (1) or sub-section (7) fails to make the deduction or after making deduction fails to deposit the amount so deducted as required by sub-section (8), 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 the section but not so deducted and, if deducted, not so deposited into the Government Treasury.
11. Without prejudice to the provisions of sub-section (10), if any such person, after deducting, fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rate of eighteen percent per annum on the amount not so deposited from the date on which such amount was deducted to the date on which such amount is actually deposited.
12. Where the amount has not been deposited after deduction, such amount together with interest referred to in sub-section (11) shall be a charge upon all the assets of the person concerned.
13. Nothing contained in this section shall prevent the assessing authority from making an assessment of tax payable by the dealer in accordance with other provisions of the Act and the dealer shall be liable to pay tax in accordance with other relevant provisions of this Act.

    Provided that any deduction made in accordance with the provisions of this section shall be treated as a payment of tax on behalf of the selling dealer, and credit shall be given to him for the amount so deducted on the production of the certificate, referred to in sub-section (9) in the tax return of the relevant period or the assessment made, as the case may be, and any amount found in excess of tax due shall be refunded to the selling dealer.

14. No deduction of any amount shall be made under this section if seller of goods is not a dealer, but the onus to prove that goods have been purchased from a person other than a dealer shall lie on the person responsible for making payment, failing which it shall be deemed that goods have been purchased from a dealer.

    Explanation: - For the purpose of this section, assessing authority in relation to person responsible for making payments to the seller means the officer having jurisdiction over the place where the principal place of business of such person inside the State is located and where such person has no such place, the place where the residence of such person is located.