The Karnataka Sales Tax Rules, 1957
PART II : Turnover and Assessment

Body 6. Determination of total and taxable turnover

(1) The total turnover of a dealer, for the purposes of the Act, shall be the aggregate of.-

(a) the total amount paid or payable by the dealer as the consideration for the purchase of any of the goods in respect of which tax is leviable at the point of purchase under one or more of the provision specified hereunder, where such purchase has taken place inside the State:-

(i) Clause (b) of sub-section (3) of Section 5;

(ii) Sub-section (4) of Section 5;

(iii) Section 6;

(b) the total amount paid or payable to the dealer as the consideration for the sale, supply or distribution of any goods other than those coming under clause (a), where such sale supply or distribution has taken place inside the State.

(c) the total amount paid or payable to the dealer as the consideration for transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract; and includes any amount paid as advance to the dealer as a part of such consideration;

(d) the total amount paid or payable to the dealer as the consideration for transfer of the right to use any goods for any purpose (whether or not for specified period);

(e) the total amount paid or payable to the dealer as the consideration in respect of goods delivered on hire purchase or any system of payment by instalments;

(f) the aggregate of the sale prices received and receivable by the dealer in respect of sales of any gods in the course of inter-State trade or commerce as determined in accordance with the provisions of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), as also in respect of sales of any goods in the course of export out of the territory of India and also in respect of sales of goods in the course of import into the territory of India.

(4) In determining the taxable turnover, the amount specified in clauses (a) to (p) shall, subject to the condition specified therein, be deducted from the total taxable turnover of a dealer as determined under clauses (a) to (e) of sub-rule (1).

(a) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into in a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount;

(b) (i) all amounts allowed to purchasers in respect of goods returned by them to the dealer when the goods are taxable on sale provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made;

(ii) all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was received;

(c) all amounts for which the dealer sells articles which are not in his stock but which are obtained by him from another dealer specially to accommodate a particular customer and are immediately sold to such customers provided that the sale in entered in the accounts then and there as an accommodation sale together with the name of the dealer from whom the articles were obtained and provided that the accommodating dealer does not make a profit out of the transaction;

(d) all amount for which goods specified in the Fifth Schedule are sold subject to the condition and exceptions, if any, set out therein;

(ee) all amounts falling under the head "charges for packing materials" when they are not charged for separately in the bill by the dealer;

(f) all amount which are actually incurred under the head "freight" when specified and charged for by the dealer separately without including such amounts in the price of the goods sold;

(ff) all amounts falling under the head "charges for packing"; that is to say the cost of packing materials and cost of labour of packing of goods not liable to tax at the hands of the assessee, whether or not such amounts are specified and charged for by the dealer separately;

(g) all amounts realised by the sale by a dealer of his business as a whole,

(h) all amounts collected by way of tax under the Act by a dealer;

(i) all amounts for which the goods specified in the Second, Third and Fourth Schedules are sold or purchased by a dealer when such sales or purchases are exempt from the tax leviable under any of the provisions of the Act;

(i-1) charges levied as litre fee under sub-rule (2) or Rule 2 of the Karnataka Excise (Duties and Fees) Rules, 1968;

(k) all amounts for which any goods are sold or purchased by a dealer when such sales or purchases are specifically exempted from tax under any of the provisions of the Act;

(l) all amounts received or receivable by way of interest on the unpaid amount payable in respect of goods delivered on hire purchase or on any system of payment by instalments, where such interest is specified and charged for by the dealer separately without including such amounts in the price of the goods delivered:

Provided that the interest allowed under this clause shall be the actual interest charged subject to a maximum of twenty per cent per annum on the amount remaining unpaid;

(l-1) charges levied as litre fee under sub-rule (2) of Rule 2 of the Karnataka Excise (Duties and Fees) Rules, 1968;

(m) in the case of works contracts specified in Serial Numbers 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 17, 26, 27, 35, 36, 40 and 42 of the Sixth Schedule;

(i) all amounts received or receivable in respect of goods other than the goods taxable under sub-section (1-A) or (1-B) of Section 5 which are purchased from registered dealers liable to pay tax under the Act and used in the execution of Works Contract in the same form in which such goods are purchased.

(ii) all amounts actually expended towards 'labour charges' and other like charges for erection, installation, fixing, fitting out, or commissioning of the goods specified in the said serial numbers;

(iii) all amounts received in respect of goods which are specifically exempted from tax under any of the provisions of the Act;

(iv) all amounts paid to sub-contractors as the consideration for execution of works contract whether wholly or partly:

Provided that, no such deduction shall be allowed unless the dealer claiming deduction produces proof that the sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amounts is included in the monthly statement or return of turnover, as the case may be, filed by such sub-contractors;

(v) such amounts calculated at the rate specified in column (3) of the Table below towards labour charges and other like charges for erection, installation, fixing, fitting out, or commissioning of the goods specified in the said serial numbers when such charges are not ascertainable from the books of accounts maintained and produced by a dealer before the assessing authority.

TABLE

Sl. No.	Type of contract	Charges for erection, installation, fixing, fitting out or commissioning as a percentage of the value of the contract
1	2	3
1	Installation of plant and machinery	Fifteen per cent
2	Installation of air conditioners and air coolers	Ten per cent
3	Installation of elevators (lifts) and escalators	Fifteen per cent
4	Fixing of marbles slabs, polished granite stones and tiles (other than mosaic tiles)	Twenty-five per cent
5	Any other works contract	Twenty per cent

(n) in the case of works contracts specified in serial numbers 6, 13, 14, 15, 16 18, 19, 20, 21, 22, 23, 24, 25, 28, 29, 30, 31, 32, 33, 34, 37, 38, 39, and 41 of the Sixth Schedule;

(i) all amounts received or receivable in respect of any goods other than the goods taxable under sub-section (1-A) or (1-B) or Section 5 which are purchased from registered dealers liable to pay tax under the Act.

(ii) all amounts received or receivable in respect of goods which are specifically exempted from tax under any of the provisions of the Act;

(iii) all amounts paid to sub-contractors as the consideration for execution of works contract whether wholly or partly:

Provided that, no such deduction shall be allowed unless the dealer claiming deduction produces proof that the sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amounts is included in the monthly statement of return of turnover, as the case may be filed by such sub-contractor,

(iv) such amounts towards 'labour charges and other like charges' not involving any transfer of property in goods actually incurred in connection with the execution of works contract, or

(v) such amounts calculated at the rate prescribed in column (3) of the Table below, if they are actually incurred towards 'labour charges' and other like charges and are not ascertainable from the books of accounts maintained and produced by a dealer before the Assessing Authority.

TABLE

Sl. No.	Type of contract	Labour or other charges as a percentage of the value of the contract
1	2	3
1	Civil works like construction of buildings, bridges, roads, etc.	Thirty per cent
2	Construction of railway coaches on under carriages supplied by Railways	Thirty per cent
3	Ship and boat building including construction of barges, ferries, tugs, trawlers and draggers	Twenty per cent
4	Sanitary fittings for plumbing, for drainage, etc.	Fifteen per cent
5	Painting and polishing	Twenty per cent
6	Construction of bodies of motor vehicles and construction of trucks	Twenty per cent
7	Laying pipes	Twenty per cent
8	Tyre retreading	Forty per cent
9	Dyeing and printing of textiles	Forty per cent
10	Any other works contract	Thirty per cent

Provided that where the turnover of a dealer claiming deduction under clauses (m) and (n) in any year is not sufficient to cover the deduction, it shall be allowed to the extent of the turnover of the dealer in that year, and the balance shall be carried forward to the year following next and so on.

(o) in the case of composite contracts specified in Serial Number 44 of the Sixth Schedule all amounts specified in clause (m) or (n) or (p), as the case may be relating to the constituent works contracts falling under such of the Serial Numbers of Sixth Schedule referred to in those clauses;

(p) in the case of works contracts specified in Serial Number 43 of the Sixth Schedule, all amount specified in clause (n), subject to conditions specified therein.

Explanation I- For the purposes of clauses (m) and (n) of sub-rule (4), labour and other like charges include charges for obtaining on hire or otherwise machinery and tools used for execution of Works Contract, charges for planning, designing and architects fees, cost of consumable used in the execution of the works Contracts, costs of establishment to the extent relatable to supply of labour and services and other similar expenses relatable to supply of labour and services.

Explanation II- For the purpose of clauses (m) and (n) of sub-rule (4), gross profit earned by a dealer shall be apportionable to the value of the goods and labour and other like charges involved in the execution of works contract in proportion to the ratio of their constitution in the total turnover.

Explanation III- For the purposes of sub-rule (4), the expression "in the same form" used in sub-clause (i) of clause (m) shall not include such goods which, after being purchased, are either consumed or used in the manufacture of other goods which in turn are used in execution of works contract.

Explanation-IV - for the purpose of clause (h) of sub-rule (4) of rule 6 all amounts collected by way of tax under the Act by a dealer shall not include all amounts collected by way of tax under section 3-A of the Karnataka Tax on Entry of Goods Act, 1979.