(1) Every person entering into a contract with a works contractor or a works contractor entering into contract with a sub-contractor for transfer of property in goods in execution of a works contract shall furnish to the appropriate Assessing Authority, particulars of such contract in Form VAT-XII within a period of thirty days of such contracts.

(2) Every person entering into a contract with a works contractor or a works contractor entering into contract with a sub-contractor for transfer of property in goods involved in execution of a works contract and liable for deduction of tax under section 17 shall make an application to the Appropriate Assessing Authority in Form VAT-XII for allotment of tax deduction number. If the application is complete in all respects, the Appropriate Assessing Authority shall, within seven days from receipt of such application, allot a tax deduction number to the applicant.

(3) For the purpose of section 17, every person in a department of any Government, a corporation, Government undertaking, a co-operative society, a local body, a trust or a private or public limited company or any other concern responsible for making any payment or 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, involved in the execution of works contract or for carrying out any works, shall, at the time of, -

(i) payment thereof in cash or by issue of a cheque or bank draft or any other mode; or

(ii) credit of such sum to the account of the works contractor; or

(iii) discharging liability on account of the said valuable consideration to the works contractor,

deduct an amount equal to 3 percentum of such sum towards the tax under section 17 of the Act from all works contractors:

Provided that in respect of C & D class contractors having annual turnover upto Rs.30 Lacs, no return shall be required to be filed under section 16 and also no assessment shall be done under section 21 and the tax deducted @ 3 percentum shall be deemed to be full and final payment.

(4) The deduction under sub-rule (1) shall be made from all payments being made in respect of all works contract executed, whether in part or in full.

(5) The amount, which any person is required to deduct in a month under the foregoing sub-rules, shall be paid by him within fifteen days of the close of each month into the Appropriate Government Treasury by a challan in Form VAT-II separately for each work contractor. The person making the payment shall append the "Quadruplicate" copy of the challan to the return in Form VAT-XIII which shall be furnished by him to the appropriate Assessing Authority within thirty days of the expiry of each quarter in respect of the deduction made by him during the immediately preceding quarter, and shall also furnish the "Triplicate" copy to the works contractor concerned as a certificate of tax deduction and payment, who shall append it to his return in Form VAT-XV or, as the case may be, in Form VAT-XV-F, in case he has opted to pay a lumpsum, by way of composition, in lieu of the amount of tax payable under the Act. A return which is unsigned or not accompanied by the appropriate copy of the challan shall be treated to be no return.

(6) The works contractor to whom a certificate of tax deduction and payment referred to in sub-rule (5) has been furnished shall, subject to verification of genuineness and correctness of the certificate, be entitled to deduct the amount shown in it from the gross amount of tax due from him for the period specified in the certificate and shall pay the balance in the manner laid down in rule 37.