Claiming that a high GST rate on old contracts adversely affecting those in the business, a body of railway contractors here today threatened to go on a strike on August 20. “There is no clarity as to how the GST will be implemented with respect to old railway contracts. Contractors have received no payments since July 1 on account of this confusion.
We had recently met Railway minister Suresh Prabhu with the request to come up with a solution, but to no avail”, national vice president of Indian Railway Infrastructure Providers Association, Ashok Kumar Pathak told reporters here. He alleged that while Prabhu placed the ball in the court of the GST council, the latter refused to take any responsibility by asking us to sort out the matter with the ministry. Pathak said the bone of contention was the GST having been fixed at 12 per cent which was much higher than the VAT which contractors had been paying prior to the new tax regime.
“VAT payable in states like Rajasthan was as low as one per cent while in Uttar Pradesh it was not more than four per cent. On August 5, the GST council fixed GST rates for both old and new contracts at 12 per cent. This would hit the contractors badly. “We have, therefore, been requesting that as far as old works are concerned, contractors be made to pay not more than four per cent towards GST while the rest may be borne by the Railways,” he said.
“Left with no options, we have decided to observe a nation-wide strike on August 20. We hope that the government acts in time and we are not forced to do anything that adversely affects railway operations across the country,” he added.