GST Impact on ongoing Construction Works contracts with Different Govt. Department And Pvt Company (For Civil Contractors)

Specific transition provision has been stipulated vide Section 159 and 160 for works contract/ periodic supplies as under:

Section 159, the goods and/ or services supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act.

Section 160, Notwithstanding anything contained in section 12 and 13, no tax shall be payable on the supply of goods and/ or services made on or after the appointed day if the consideration for the said supply has been received prior to the appointed day and the duty or tax payable thereon has already been paid under the earlier law’

> As per the above, it appears that in case of periodic/ continuous supply of goods/ services, GST Act would not apply on advances received prior to the GST law for goods/ services to be provided during the GST regime, provided tax has been paid on the same. This provision does not cater to the scenario where tax has not been paid, but is payable under the earlier law post enactment of the GST regime.

> Also, there is no provision for treatment of supplies prior to the GST law, where either the invoice has not been raised for the same, or payment has not been received, or tax has not been paid, prior to enactment of the GST law. This could result in dual taxation, both under the previous regime as well as under the GST regime.

Contractors would need to examine the coverage of the transition provision as to whether implications for all its possible transactions during the transition period are clear.

Key Action points in last four days (27th June to 30th June-2017)

1. Contractors should raise running account bills for the work done till 25.06.2017 before 06.2017, so the impact of GST @18% can be avoided, but contractor should take  receiving of bills submitted to the contractee (client of the contractor) for his record.

2. If any Advance payment has been received from contractee (client of the contractor) before 30.06.2017 then Contractor should pay Service tax @6% to avoided impact of GST @18%. In case the project is exempted under notification no. 25/2012(service tax)  than in such case service tax shall not be payable. However it very important to show  exempted/Taxable Work Contract service in ST-3 return (April 2017 to June-2017)

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Location: DELHI, New Delhi, IN
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14 responses to “GST Impact on ongoing Construction Works contracts (For Civil Contractors)”

  1. SHRAWAN KUMAR says:

    HELLO SIR , GOVERMENT PANCHYAT SE WORK ORDER HAI UNKA GST MAI TAXATION KYA RAHEGA.

  2. kamal says:

    i have 24 labour can gst is applicable on me ? if yes then how much tax slab on me, and tell me other criteria

  3. Siri says:

    What is the Exact GST rate on Civil Works like roads, Drains etc.. under ULBs?and also please explain Calculation process of GST on above works.

  4. Deepak Kumar says:

    What is the impact of G S T on Defence Contracts?

  5. Pankaj Taparia says:

    Sir,
    Under Central Excise notification No. 12/2012, dated 17th March, 2012,
    certain goods supplied for providing potable water to humans/animals
    get Excise exemption against PAC certificate issued by the District Collector.
    What will be the position after 1.7.2017 of ongoing supplies
    which are partly executed with ED exemption?
    Since Excise duty is discontinued after 1.7.2017,
    are there any parallel provisions for exemption under GST?
    Please reply. Thanks.
    Pankaj Taparia
    Indore
    #9425056357

    • Avtar Singh says:

      Do the services provided to state government by construction of dams and canals will continue under exemption in GST?

  6. SURBHI JAIN says:

    ON PURCHASE OF PLANT AND MACHINERY FOR CONSTRUCTION WORK, WILL INPUT TAX CREDIT WILL BE AVAILABLE ? CAN IT BE ADJUSTED WITH GST LIABILITY UNDER WORK CONTRACT?

  7. rrkothapally says:

    Sir, Section 159 and 160 of CGST Act,2017 do not seem to discuss WCS.

    • caankitjha says:

      Chapter-XXV TRANSITIONAL PROVISIONS, Section 159 deals with Treatment of long term construction / works contracts and Section 160 deals with Progressive or periodic supply of goods or services

      • rrkothapally says:

        Sir,
        I have verified once gain and found that the Section 159 and 160 are not of present CGST Act,2017 but are of Model GST law. Just for information please. .

  8. S KISHORE KUMAR says:

    Prior to the imposition of GST, service tax was exempted on construction services of roads and bridges. Now on introduction of GST ( Indirect taxes under one roof ) Service Tax is included in GST. What is the impact on construction services of roads and bridges ?

    • caankitjha says:

      there is no clarity on concessions/exemptions for infrastructure projects under the GST regime. In the absence of such exemptions/ concessions, there
      is a possibility of significant increase in project cost.

    • Avtar Singh says:

      My question is same as sl no.4

  9. pandeps says:

    Very Informative and concept clearing note. Thanks…

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