WORKS – WORKS CONTRACTS IN SUBSISTENCE AS ON 01.07.

2017 –
APPLICATION OF G.S.T – DEDUCTIONS AND ADJUSTMENTS –NEEDS
IMMEDIATE ACTION.

GST came into force with effect from 01.07.2017 Central Act 2017. The Govt in
G.O.Ms. No. 67 Irrigation and CA (Reforms) Dept dated 04.07.2018 have issued
comprehensive guidelines on the application of the GST in the works’ contracts subsisting as
on 01.07.2017 and after.

 GST for the period from 01.07.2017 to 31.07.2017 has to be applied at the rate
of 18% on the value of the bills.
 From 1.08.2017, it should be applied at the rate of 12% on the value of the
bills.
 For the works having earth work component of 75% and more in terms of cost
of the concerned works estimates GST is to be levied at 5% on the bills value.
 Under the GST regime, there is a facility of taking credit for all the GST
already paid by the agencies on all the inputs, i.e. various material like
Cement, Steel, Pipes etc during the course of work execution These taxes paid
by the works agencies are to be accounted as paid against the GST payable @
18% or 12% or 5% on the bills value and the balance tax is to be paid by the
agencies towards GST on the work bills payments received by them.

Since GST is a new tax not stipulated in the subsisting agreements of the works as on
01.07.2017 or after without the stipulation, the same has to be reimbursed to the
agencies after considering the actual net amounts paid/payable by them during the
works executions towards GST. For this purpose, the taxes embedded in the estimates
are to be worked out by the estimate sanctioning authorities and communicated to the
agreement authorities. After due approval of Agreement authorities, the difference has
to be adjusted.

The work bills which were final check-measured before 1.07.2017, need not to
revoked.

As seen from the work bills of PRI/ULB ___________ in all the

works whose contracts were in subsistence as on 01.7.2017, VAT has been applied.
The works which were under execution as 01.7.2017 and even after were applied
VAT whereas the payment should have been under GST regime. Such works for
which GST has to be applied are enlisted in the annexure enclosed.

The executive authority has to be review the payments of all the works made
after 01.07.2017 and arrange for the re-imbursement of the GST to the agencies which
is payable to them after getting the details of the input credit and/or adjustment of the
embedded tax in the material used. This requires the immediate process. The
compliance of the Govt instructions should be reported to the audit.

(ANNEXURE OF THE WORKS ENCLOSED)