Reverse Charge in VAT - Section 8(3)

Applicable:

This section applies to the construction of Building Apartments, Shopping Complex including Road, Bridge, Electricity Production Center, Hall which are not movable for value more than 50 lakhs.

Construction should be for Business Purpose. Business purpose means for sale or for use in income generation.

The construction should be at one place and value more than 50 lakhs. If Business place, Branches are constructed at different places, It shall not be included. But Road, Bridges etc constructed at different locations shall be considered as one unit.

All the works/ purchases shall be done from VAT registered person. If not done from VAT registration party, reverse charge shall be applicable.

Valuation - more than 50 lakhs

All the cost related to the project (e.g. Electrification, Sanitation, painting, interior decoration etc) are to be included except Financial Costs.

Calculation of Taxable Value and Tax

Pre-construction costs (e.g. Design, Financial Charges etc.) shall not be included for the computation of Taxable Value.

Construction Period

There is no construction period, rather a project is to be considered for taxation purpose.

Payment of Value Added Tax

Tax amount is calculated on Taxable Amount and should be paid within 25 days from the end of the month on which transaction occurred.

Penalty

If the payment is not done as per this section 25% of penalty can be imposed.