As
per clause 119 of Section 2 of CGST Act, 2017.
“
Works Contract “ means a contract of building, construction, fabrication, completion,
erection, installation, fitting out, improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any immovable property wherein transfer
of property in goods (whether as goods or in some other form) is involved in
execution of such contract.
List of Works Contract Services which are Zero Rate of GST :-
1. Services provided by way of pure
labour contracts of construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance, renovation, or alteration of a
civil structure or any other original works pertaining to the beneficiary-led individual
house construction or enhancement under the Housing for all
(Urban) Mission or Pradhan Mantri Awas Yojana.
2. Services by way of pure labour
contracts of construction, erection, commissioning, or installation of original
works pertaining to a single residential unit otherwise than as a part of a
residential complex.
SAC Code (Service Accounting Code) :
Please Check SAC Code List according to your nature of Contract, CLICK
HERE.
Liability of GST on Works Contract Service : As per section 22 to 25, any person who is engaged in supply of goods or rendering of services or both will be liable to be registered under GST if,
1.
Aggregate turnover in a financial
year of taxable supply of Goods or Services exceeds Rs. 20 Lakhs or,
2.
Aggregate turnover in a financial
year of taxable supply of goods or services exceeds Rs. 10 lakhs if the person
is located at North Eastern States of India (including Assam, Meghalaya,
Manipur, Mizoram, Nagaland, Arunachal Pradesh, Tripura and Sikkim) and states
of Himachal Pradesh, Uttarankhand and Jammu & Kashmir.
Composition Scheme : NOT allowed in case of Service Providers.
Rate of GST rate :
Description
of Services
|
Rate
of GST
|
Construction of a complex,
building, civil structure or a part thereof for sale to a buyer, wholly or
partly (the value of land is deemed to be one-third of the total amount
charged for such supplies).
|
12% with NO refund of accumulated
ITC
|
Composite supply of Works
Contract as defined in clause 119 of Section 2 of CGST Act, 2017
|
18%
|
Eligibility of ITC (Input Tax Credit) : As per section 17(5) ( c) , ITC is not available for (a) works contracts services when supplied for construction of immovable property, other than plant and machinery, except where it is an input service for further supply of works contract service and (b) goods or services received by a taxable person for construction of an immovable property on his account, other than plant and machinery, even when used in course of furtherance of business.
The following points are more important in case of Works Contract Services :-
1. Time of Supply :-
Time of supply means the point in time when goods/Services are deemed to
be supplied or rendered. It enables us to determine the rate of tax, value and
due dates for payment of Taxes. The liability to pay CGST/SGST will arise at
the time of supply as determined for goods and Services.
In case of Works Contract Service, as per section section 12(2), the time
of supply of services shall be the earliest of the following dates, namely ;-
(a)
The date of issue of invoice by
the supplier, if the invoice is issued within the period prescribed under
sub-section (2) of section 31 or the date of receipt of payment, whichever is
earlier ; or
(b)
The date of provision of service,
if the invoice is not issued within the period prescribed under sub-section (2)
of section 31 or the date of receipt of payment, whichever is earlier; or
(c)
The date on which the recipient
shows the receipt of services in his books of account, in case where the
provision of clause (a) or (b) do not apply.
If the supplier receives an amount upto Rs. 1000 in excess of the invoice
amount, the time of supply for extra amount shall be the date of issue of
invoice.
Time of supply in case of continuous
service :
Time of supply in this case will be as per
(1)
Where the due date of payment is
ascertainable from the contract, the date on which the payment is liable to be
made by the recipient of service, whether or not any invoice is issued or any
payment has been recived by the supplier of service.
(2)
Where the due date of payment is
not ascertainable from the contract, each such time when the supplier of
service receives the payment, or issue an invoice, whichever is ealier.
(3)
Where payment is linked to the
completion of an event, the time of completion of that event.
Time of supply under
reverse Charge :-
Reverse charge means the liability to pay tax is on
the recipient of goods/services instead of the supplier. In this case, time of
supply shall be the earliest of the following :
The date of payment OR the date immediately after 60
days from the date of issue of invoice by the supplier
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