1. GST rollout: Tax on work contracts hiked from 12 pct to 18 per cent

GST rollout: Tax on work contracts hiked from 12 pct to 18 per cent

Ahead of the Goods and Services Tax (GST) rollout, the government on Thursday notified related rules and rates while raising the tax on construction services, including composite works contract, from 12% to 18%.

By: | New Delhi | Published: June 30, 2017 7:07 AM
The notified rules also provide an exemption to daily supplies worth Rs 5,000 and below from tax deducted under reverse charge mechanism. (Reuters)

Ahead of the Goods and Services Tax (GST) rollout, the government on Thursday notified related rules and rates while raising the tax on construction services, including composite works contract, from 12% to 18%. The notified rules also provide an exemption to daily supplies worth Rs 5,000 and below from tax deducted under reverse charge mechanism. While the rates announced by the GST Council earlier pegged the GST rate for construction services at 12%, including the value of the land, the notified rules say the service tax charged on construction supply will now be levied on value of supplies minus the value of land. The value of land will be deemed to be one-third of the value of construction services.

“Since the land value to be excluded for taxation is one-third of the value of total supplies, the effective GST rate on the construction services will remain at 12%,” Abhishek Jain, tax partner at EY India, said. Additionally, the government has exempted unregistered supplier whose value of supplies to a registered buyer doesn’t exceed Rs 5,000 per day from GST. Under the earlier rules, a registered recipient would deduct tax under the reverse charge mechanism for supplies made by an unregistered supplier.

This will, however, only apply to intra-state supplies. Similarly, the notified rules also exempt unregistered supplier from tax deducted at source by the recipient for intra-state supplies. Moreover, it brought clarity to the transactions involving second-hand goods by exempting it from any tax when a unregistered person sells such commodity to a designated second-hand dealer. In normal course, any supply from an unregistered entity to a registered one is liable for GST.

  1. R
    Rakesh Kumar
    Sep 12, 2017 at 2:54 pm
    SIR WE ARE THE CONTRACTOR OF CIVIL WORK ( DRILLING OF BORE WELL, CIVIL WORK, SUB-CONTRACTOR) SIR PLEASE TELL ME THE THE RATE OF GST ON OUR SERVICE PROVIDED TO THE CLINT /DEPT.
    Reply
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      Dhruba
      Sep 11, 2017 at 8:05 pm
      Dear Sir, kindly inform the GST rate for the tender of civil work (new building construction) recieved directly from the central govt, i.e, Border Security Force (BSF)
      Reply
      1. S
        sujay kuruvila
        Aug 17, 2017 at 12:06 pm
        Respected sir, kindly inform me about the tax payable for works contract for a turn key interior decoration assignment.
        Reply
        1. M
          Mohan Nimdeokar
          Aug 11, 2017 at 1:11 pm
          Respected sir, Kindly write the GST rates for the work contractor regarding electrical tower high tension line transmission 66kv,132kv, 220 kv 400kv work. Please do the needful urgently. our mail id is msnimdeokar our Mob. No. 9561064499 Regard Sanjay
          Reply
          1. S
            Sanjay Dagde
            Aug 11, 2017 at 1:08 pm
            Respected sir, Kindly write the GST rates for the work contractor regarding electrical tower high tension line transmission 66kv,132kv, 220 kv 400kv work. Please do the needful urgently. our mail id is msnimdeokar our Mob. No. 9561064499 Regard Sanjay
            Reply
            1. S
              sanjay
              Aug 11, 2017 at 1:04 pm
              Respected sir, Kindly write the GST rates for the work contractor regarding electrical tower high tension line transmission 66kv,132kv, 220 kv 400kv work. Please do the needful urgently. our mail id is msnimdeokar our Mob. No. 9561064499 Regard Sanjay
              Reply
              1. H
                Hanumant Singh
                Aug 7, 2017 at 8:20 pm
                Sir work contract in government departments me work Jo current me chal raha hai jisaka running payment pahale Ho chuka hai. Next payment Jo ab hona hai usame GST kaise charge kare , jab Ki work agreement gst ke pahale ka hai , kya department extra Tax pey kare ga . ?
                Reply
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                  Deep Constructions,Surat
                  Aug 16, 2017 at 8:18 am
                  Sir, We are engaged with the Govt.contract works by Tender system for civil and other works including materials, than what will be the GST rate and how we can get the Input credit,
                  Reply
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