03 July 2019
Hi. One of Register contractor (3rd Grade Contractor)under GST as a proprietor is providing the Road Repair Works services to RDPS department. After completion of work they have paid the contractual amount after deducting 2% GST and informed 12% GST is applicable 2%we will deduct and pay balance you have to pay to tax department. And saying Invoice is not required to generate. Now the problem is how will the differential Tax to be deposited to tax dept without raising the invoice as Invoice no is mandatory while filing GSTR1. Along with this RDPS have deducted WCT,IT, and some other taxes as well How this kind of treatments have to be shown in Returns pls advise.
09 July 2024
In the scenario you described, where the contractor (registered under GST as a proprietor) provides services for road repair works to the RDPS department, there are a few key points to consider regarding GST compliance and reporting:
### GST Treatment for Road Repair Works Services
1. **GST Deduction by RDPS Department**: The RDPS department has deducted 2% GST from the payment made to the contractor and communicated that the total GST applicable is 12%, out of which 2% is withheld and the remaining 10% is to be paid by the contractor.
2. **Issue of Invoice**: The contractor has not generated an invoice as per the communication from RDPS. However, under GST rules, issuing an invoice is mandatory for every supply of goods or services.
3. **Payment and Reporting GST to Tax Department**: - **Payment by RDPS**: The RDPS has deducted 2% GST and paid the balance amount to the contractor. - **GST Liability**: The contractor is liable to pay the remaining 10% GST to the government. - **Reporting in GSTR-1**: Since an invoice is mandatory for reporting in GSTR-1, the contractor should generate an invoice for the services provided to the RDPS department. This invoice should reflect the total value of services provided and the GST amount due (10% in this case).
4. **Treatment of WCT and Other Deductions**: - **WCT Deduction**: If the RDPS department has deducted Works Contract Tax (WCT) or any other taxes, these should be separately accounted for. - **GST on Gross Amount**: The GST liability of 12% (as communicated) should be calculated on the gross amount (before deduction of 2% GST by RDPS).
### Steps to Follow:
- **Generate Invoice**: Even though the RDPS department has not requested an invoice, it's necessary for GST compliance. Generate an invoice for the total value of services provided and clearly mention the GST amount payable (10% of the gross amount).
- **Payment of GST**: Pay the GST liability of 10% to the government through the GST portal. Use the details from the invoice generated to fill out the GSTR-1 form.
- **Reporting in GSTR-1**: Report the transaction in GSTR-1 under the relevant section (B2B for business-to-business transactions). Enter the details of the invoice generated, including the gross amount, GST amount, and other required information.
- **Documentation**: Maintain records of the payment received, deduction of 2% GST by RDPS, and the invoice issued. These records will be essential for audit and compliance purposes.
### Conclusion:
It's important to adhere to GST rules and procedures despite the communication from RDPS regarding the invoice. Issuing an invoice and reporting the transaction accurately in GSTR-1 ensures compliance with GST regulations. If there are specific deductions like WCT, IT, or others, ensure these are accounted for separately and appropriately documented. If there are any doubts or complexities, consulting with a GST expert or a chartered accountant can provide guidance tailored to your specific situation.
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