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Works contract

SUMATHI manivel (1 Points)

13 July 2017

What is the rate of tax for works contracts. Whether I can avail ITC on the purchases made on goods and services.

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9 Replies

Sudhakar (account operations) (75 Points)
Replied 13 July 2017

18% standard GST rate , yes you can avail ITC on purchases

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Sandeep Upadhyay (1518 Points)
Replied 13 July 2017

18% tax, ITC not availed in work contract

Vishal Agrawal (ADVOCATE) (59 Points)
Replied 13 July 2017

18% you are claim it on purchase

Sandeep Upadhyay (1518 Points)
Replied 13 July 2017

Section 17 (5)( c) : Input Tax Credit shall not be available in respect of the following, namely: “ works contract services when supplied 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”The restriction does not apply to plant and machinery and also in case the input services are further used for supply of Works Contract service( Contractor can avail the ITC in respect of services availed from the sub-contractor

Rudrayani Shedjale (Assistant Accountant) (751 Points)
Replied 18 July 2017

if Govt.Agency has given a contract to a registered civil work contractor, for construction of their building, do they have to pay GST? because if we are doing any expense above Rs.5000, we have to pay GST on the same. So govt agencies/authorities are not bound to pay any tax?

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Sandeep Upadhyay (1518 Points)
Replied 18 July 2017

@ vishal,sudhakar (107) ”works contract” means an agreement for carrying out for cash, deferred payment or other valuable consideration, building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, renovation or commissioning of any moveable or immovable property

Sandeep Upadhyay (1518 Points)
Replied 18 July 2017

@ vishal, sudhakar Section 16(9) provides that Input tax credit shall not be available for the following in relation to works contract: (c) goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery; (d) goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery;