Article explains What is works contract,? Works contract – Goods or services?, Block ITC on Procurement Of Works Contract services?, Maintenance of accounts by registered person executing works contract and GST Rates for Works Contract.

1. What is works contract?

As per section 2(119) of CGST Act “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;

Note: -Contract for any movable property: – Treated as composite supply/mixed supply

2. Works contract – Goods or services?

As per schedule II of CGST Act, works contract as defined above shall be treated as supply of services

3. Block ITC on Procurement Of Works Contract services?

Procurement of works contract services for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

Explanation.– the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;

Example:-

  • ITC on works contract services (Input Tax credit) will be available to builder because procurement of services for further supply of services
  • However procurement of works contract services for construction of building for running as Hotel, then in that case procurement of works contract services is not for further supply of works contract services

4. Maintenance of accounts by registered person executing works contract

Every registered person executing works contract shall keep separate accounts for works contract showing –

(a) the names and addresses of the persons on whose behalf the works contract is executed;

(b) description, value and quantity (wherever applicable) of goods or services received for the execution of works contract;

(c) description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract;

(d) the details of payment received in respect of each works contract; and

(e) the names and addresses of suppliers from whom he received goods or services.

5. GST Rates for Works Contract

Chapter 99, Section 5 Heading 9954 (Construction services)

Till 30th Sept. 2017, 3 notifications issued for works contract under central tax rate i.e.

Title Notification No. Date
CBEC reduces CGST rate on specified supplies of Works Contract Services Notification No. 24/2017-Central Tax (Rate) 21/09/2017
CGST- Reduction in rate on specified supplies of Works Contract Services etc Notification No. 20/2017-Central Tax (Rate) 22/08/2017
Rates for supply of services under CGST Act, 2017 Notification No. 11/2017-Central Tax (Rate) 28/06/2017

Description of Service Rate (per cent.)

CGST

N/N & date Comments
(i) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

(Note 1 shall apply for valuation of this service)

9% N/N 11/2017 dated 28th June 2017 Description of services same as prescribed in Schedule II, Entry 5(b)
(ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017

(As written above)

9% N/N 11/2017 dated 28th June 2017 Provision talks about works contract services as defined in section 2(119) of CGST Act 2017
(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, –

(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(b) canal, dam or other irrigation works;

(c) pipeline, conduit or plant for

(i) water supply

(ii)water treatment, or

(iii)sewerage treatment or disposal.

6% N/N 20/2017 dated 22nd August 2017 Ø Supplied only to specific person i.e.

• The government

• Local Authority

• Government authority

Ø only by way of specific services

Ø Following work not covered here which was covered by works contract definition

• Fabrication, improvement & modification

Note:- As per section 2(53) “Government” means the Central Government; and hence State Government not covered here

(iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;

(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(e) a pollution control or effluent treatment plant, except located as a part of a factory; or

(f) a structure meant for funeral, burial or cremation of deceased.

6% N/N 20/2017 dated 22nd August 2017 Supplied to anyone and by way of specific services

Following work not covered here which was covered by works contract definition

• Fabrication, improvement & modification

(v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,-

(a) railways, excluding monorail and metro;

(b) a single residential unit otherwise than as a part of a residential complex;

(c) & (d) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under

• the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

• the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

• any housing scheme of a State Government;

(e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

(f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.

6% N/N 20/2017 dated 22nd August 2017 Supplied to anyone and by way of specific services

Following work not covered here which was covered by works contract definition

fabrication, completion, fitting out, improvement, modification, repair, maintenance, renovation & alteration

(vi) Services provided to the Central Government, State Government, Union Territory, a local authority (Note 3) or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

(b) a structure meant predominantly for use as

(i) an educational,

(ii)a clinical, or

(iii)an art or cultural establishment; or

(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.

(See Note 2)

6% N/N 24/2017 dated 21st Sept. 2017 Supplied to only

Central Government, State Government, Union Territory, a local authority or a governmental authority

• and by way of specific services

Following work not covered here which was covered by works contract definition

Fabrication, improvement & modification

Note that here specifically state government covered

(vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above. 9% N/N 24/2017 dated 21st Sept. 2017

Note: – 1

In case of supply of service specified in at item (i) of the Table above, involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be.

Note: – 2

Following persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.

(a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;

(b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or

(c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.

Note-3 “local authority” means––

(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;

(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;

(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund;

(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;

(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;

(f) a Development Board constituted under article 371 of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution;

(For any queries contact CA Akshay Kumar Jain at M: – 99-5005-4004; Email at: akshay@rngca.com)

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20 responses to “All about GST on Works Contract and Work Contact Tax Rate”

  1. YOGESH PROHIT says:

    YES, EWAY BILL MANDATE.

  2. mida perme says:

    A work contract in a govt building a rural road using only land filling thus involving only srevice is taxable under gst or not

  3. Neelam shrivastava says:

    I m work contractor which returns is compallsary filling in gst

  4. Neelam shrivastava says:

    I m work contractor which returns is compallsary filling in gst

  5. ranganath says:

    GST applicability on Purely Government Electrical Contract. While raising RA Bill if contract is given inclusive of GST. Then while raising bills how to books RA Bill.

  6. DONIRAJU says:

    My client doing works contract service purchased material which are used for output supply .The seller invoice is issued 31st august 2017 but seller of material uploaded in gstr 1 september month when can we claim the input tax credit
    thank you
    regards
    doni raju

  7. Chandra sekhar says:

    sir,

    Please clarify the following points given below :
    1 .what is rate of GST – if contractor supplying labour for our Raod Projects without involvement of materiel supply.
    2.Is it Turnover Rs.20 lakhs mandatory for labour contractor
    3.What is the Work contract Tax under GST

  8. VINOD says:

    Suppose I am filing GST of December Month and in that month I received the amount of previous year contract work. Can I show that Amount in GST filing of December Month??…

  9. G.S.Maheshwari says:

    What is the GST rate on distribution and pesting job charging or labour

    • karam singh says:

      my work is labor job for centrifugal pump old pump repaier only farmer direct on my shop come what repiar job on tax able or free plz gide me

  10. shyam says:

    we are extracting minerals out of our own machinery from a government mines area on a contractual basis as such minerals are then provided to govt for further sales. At what rate GST will be applicable. plz Respond as soon as possible on the E-mail provided.

  11. Dileep says:

    Respected dear all,

    E-way bill required for transporting the goods from manufacturing unit(factory ) to construction area
    (All condition is satisfied the value Rs.50k and more than 10km.

    Plz reply as soon as possible

    Thanks in advance

  12. Prabha jain says:

    We are interior decorators and we make things both moveable and immovable
    Fixed thins like glass partition
    Sheds
    Wall paneling
    Wall paint
    False ceiling
    Plumbing and sanitary lines and fittings
    False ceiling
    Brick walls
    Cement plastering
    Laying marble tiles and granite etc
    Laying electrical lines, and fixing switches etc
    Fixing air conditioners, fridge, etc

    Would be grateful to know as to how much GST I need to charge for such work contracts.
    Taxes paid for different items are different like AC, CEMENT. GLASS WOOD PLY WOOD AND TAPESTRY ETC
    They vary from 5% to 28%
    will I be eligible for input benefit
    I would appreciate a prompt reply
    Regards
    Prabha

  13. shyam lal seth says:

    work contract service

  14. shyam lal seth says:

    work contract .repair building maintenance works

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