GST RATE ON WORK CONTRACT/ CONTRCUTION SERVICES
We are reaching out to seek your expert guidance regarding the applicable Goods and Services Tax (GST) rate for a works contract executed for the construction of silos at [Project Location].
As per the work order issued, we have undertaken the construction, civil structures, and other related works for the said project. We have applied an 18% GST rate under HSN Code 995413, which corresponds to the standard GST rate for works contracts.
However, our principal has raised concerns regarding the GST rate, suggesting that in cases where the value of goods in the contract constitutes 25% or more of the total contract value, a 12% GST rate may be applicable. We would like to clarify whether such a provision exists under the prevailing GST laws and whether our current approach is in compliance.
To ensure adherence to regulatory requirements and avoid any discrepancies, we kindly request your professional opinion or reference to any official notification that supports the correct GST rate application for our case.
We appreciate your time and expertise in this matter and look forward to your response at the earliest convenience.
Sir, after 01.07.2022 all the works contract services, irrespective of goods to services ratio, are at 18%. There is only one case in my knowledge where such mention of 25% is there is law in case of works contract which exempts certain works contracts in GST.
Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. GST Rate Nil vide Notification No: 2/2018-CTR
Hence, in my opinion GST is liable at 18%. You may ask the other party to provide documents in their support if they have any.
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