We have clients who are service providers engaged in works contracts (involving supply of materials, labor, or both) for residential construction projects. They receive payments based on the percentage of completion method.
The issue we're facing is that while the service recipients (customers) pay the consideration for the work, they are reluctant to pay the applicable GST. As a result, our clients have rendered services but have not collected the GST.
Our clients explain that they operate in a highly competitive environment. If they insist that customers pay the GST, these customers claim they can find other providers who will work without charging GST, and consequently, they may take their business elsewhere.
This situation has become perplexing for both us and our clients. We're seeking advice on how to handle this predicament while ensuring compliance with tax regulations and maintaining our clients' competitiveness in the market.
What would you recommend as the best course of action in this scenario?
CAclubindia
