Works Contract

&
Tax Deducted at
Source (TDS)
 Agenda

Works Contract

Tax Deducted at Source

(TDS)
Works Contract
 Works Contract - Agenda
PRESENTATION PLAN

Definition of Works Contract

Scope of Supply
Tax Rate in Works Contract
ITC
Time of Supply of Service
Registration
Composition Scheme
Invoice Details and Process
 Works Contract - Definition
Works Contract is defined in Section 2 (119) of
CGST Act:
Works Contract means a contract for building,
construction, fabrication, completion, erection,
installation, fitting out, improvement, modification,
repair, maintenance, renovation, alternation 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
Definition such contract
 Works Contract - Definition

Thus Works Contract has four major components

as:
1. There should be a contract
2. For building, construction, fabrication, completion,
erection, installation, fitting out, improvement,
modification, repair, maintenance, renovation,
alternation or commissioning
3. Immovable Property
4. Transfer of Property in Goods
Works Contract Scope of Supply

Under Jharkhand Goods and Services Tax

Act, 2017:

Schedule II of Act specifies that works contract

is treated as Supply Of Service.
 Works Contract - Rate of Tax

Works contract as defined in clause 119 of

section 2 of CGST/SGST Act attracts rate of

18% with full ITC.

 Works Contract - Input Tax

Input Tax:
Input Taxes are taxes that you pay when you purchase materials
(Goods) or services or both for furtherance of your business.

ITC:
A registered person is entitled to take credit of input tax (ITC)
charged on supply of goods or services or both procured by him.
ITC also allowed on Capital Goods
ITC not allowed for the goods and services for personal use
ITC to be allowed in course or furtherance of Business
ITC is not eligible under certain situation such as mentioned in sec. 17
of JGST Act, 2017.
 Input Tax
Example: Construction of Road

Input
GST paid on
Goods Bitumen, Stonechips,
Cement etc.

GST paid on Can be ITC can be

Capital purchase of claimed as used to
Goods Machines, Grinders, Mixer
Credit setoff with
etc.
(ITC) your output

GST paid while

Services hiring
from agencies Under Labour from agency,
sec 17(5)(C) of JGST
Surveyor, Architect etc.

GST paid on these

Goods, Capital Goods &
Services
Works Contract Time of Supply

Time of Supply of service (Section 13 (2)):

if the invoice is issued within the prescribed time limit (within 30

days of supply), the time of supply of services shall be the date

of issue of invoice by the supplier or the date of receipt

of payment whichever is earlier
If the invoice is not issued within 30 days of supply, the time of

supply of service shall be the date of provision of service

or the date of receipt of payment, whichever is earlier.

Works Contract Transitional Provision

Service provided before applicability of

GST(As per section 14):
If invoice issued before GST regime but payment received under
GST regime, the Time of supply shall be the date of issue of invoice.
Ex: If the Bill is issued by the contractor before 30th June and payment is received in
the month of July then the VAT provisions will be applicable on such bills.

If invoice issued and payment received under GST regime, the Time
of supply shall be the date of invoice or the date of payment receipt,
whichever is earlier (GST Provisions will be applicable in
such bills)
 Works Contract Registration
Registration:
As per section 22 every supplier who makes a taxable supply of services in the
State and If his aggregate turnover in a financial year exceeds 20 Lakh
Rupees (in the entire country under single PAN), he shall be liable to be
registered under this section.

Compulsory Registration
As per section 24 a person making any inter state taxable supply or required
to pay tax under reverse charge basis shall also be required to get registered
at the time of 1st such supply irrespective of his aggregate turnover.
Whenever he becomes liable under sec 22 or sec 24. he has to apply for
registration within 30 days.
Registration for DDOs will start from 25th July,2017
 Works Contract Registration
Composition Scheme:
Under GST, Composition scheme is not applicable to service
provider except Restaurant and hence Composition Scheme not
applicable to works contract.
 Tax Invoice for Works Contractor

Issuance of Tax Invoice(section 31)

A registered works contractor supplying taxable services shall issue a

tax invoice showing 16 particulars prescribed u/r 46.
The said tax invoice shall be issued before or after the provision of
services but within a period of 30 days from the date of the supply of
service(u/r 47)
 Tax Invoice Contents

All invoice under GST must have the following information

1. Name, address and GSTIN of the supplier
2. Tax invoice number (it must be generated consecutively and each tax invoice will have a
unique number for that financial year)
3. Date of its issue
4. If the buyer (recipient) is registered then the name, address and GSTIN of the
recipient
5. If the recipient is not registered AND the value is more than Rs. 50,000 then the
invoice should carry:
a) Name and address of the recipient
b) address of delivery
c) state name and state code
6. HSN code of goods or accounting code of services**
7. Description of the goods/services
 Tax Invoice contents

All invoice under GST must have the following information

8. Quantity of goods (number) and unit (metre, kg etc.)
Since in case of works contract, it is supply of services so Quantity in such

cases is not required.

9. Total value of supply of goods/services
10. Taxable value of supply after adjusting any discount
11. Applicable rate of GST (Rates of CGST, SGST, IGST, UTGST and cess clearly
mentioned)
12. Amount of tax(With breakup of amounts of CGST, SGST, IGST, UTGST and cess)
13. Place of supply and name of destination state for inter-state sales
14. Delivery address if it is different from the place of supply
15. Whether GST is payable on reverse charge basis
16. Signature of the supplier.
Tax Deduction at
Source (TDS)
 TDS Provisions Under GST

PRESENTATION PLAN
Liability

T.D.S rates and procedure

Registration of DDO (TDS deductor)

Return filing by DDO

Penal provisions
Liability to Tax deduction at Source

Liability:
On taxable supply-under a contract above 2.5 Lakh
For DDOs, if contract value of supply is equal to or less
than 2.5 Lakh, then they are neither required to take
registration nor deduct TDS.
Liability to Deduct:
(a) Central Government or State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) Persons or category as notified by the Govt. on
recommendation of GST council
 SGST+ CGST or only IGST

To deduct tax at the rate of 2%

Intra State Supply :
TDS @ - 2 % (1% SGST + 1% CGST)
When supplier and place of supply in Same State (Intra)
Inter State Supply:
TDS @ - 2 % IGST (2% only)
When supplier and place of supply in different States (Inter)
Ex. Supply to Jharkhand (Recipient)
Delivery in JH SGST + CGST (1 % + 1% = 2%)
Delivery from other State - IGST 2%
 Payment and other Procedures

Payment to be made through www.gst.gov.in

Payment at GSTN before 10th of next month

Certificate(GSTR-7A) to deductee within 5 days

of filing of return in GSTR 7.
 Procedure for registration

Online Application at GSTN (GST REG-07)

GSTIN by TAN (Income Tax) and DSC/Aadhar

Approval within 3 common working days

No query will be made by proper officer

Certificate download (GSR REG-06)

Login

www.gst.gov.in
 Return

Every TDS deductor to file monthly return (GSTR-07)

Return to be filed only for the month in which there has

been some TDS deductions
Not for every month

Due date of Return - 10th of next month

Deductee to get (GSTR-07) in part-C of his (GSTR-2A)

 Penal Provisions

Late Payment by Deductor Interest @ 18 % [51(6)]

Deductor fails to furnish GSTR-7A

Penalty Rs. 100/- per day (Maximum Rs. 5000/-) [51(4)]

Fails to deduct tax or Deducts less tax amount or Fails to

pay to government

Penalty-10000/- or equivalent to tax (not deducted or

short deducted or not paid) whichever is higher
[122(v)]
 Transitional Provisions. 140 (13)

TDS on Earlier Supplies

A Supply qualifying for TDS in VAT
Sale made prior to GST date
And also an invoice issued prior to GST

No TDS to be made under GST

Earlier Law Provisions to be applicable

 Certificate

Certificate on Bills or Cheque by DDO:

1. If no TDS is being deducted on any works contract then a

certificate has to be obtained from DDO that I am not
required to deduct tax at source u/s 51 of JGST, Act 2017

2. DDO of Works Division should furnish the details of

contractors tax invoice number and issue date as a certificate
on cheques presented in treasury for payment to contractor.
 In case of Problem

GSTN Help Desk Multi Language

CBEC help Desk

Toll free Call Centre

Local Office

Law at different web sites

Instruction for filling Application for Registration as Tax Deductor

Enter Name of Tax Deductor as recorded on TAN/ PAN of the Business.

TAN/PAN shall be verified with Income Tax database.

Provide Email Id and Mobile Number of DDO (Drawing and Disbursing

Officer) / Person responsible for deducting tax for verification and future
communication which will be verified through One Time Passwords to be
sent separately, before filling up of the application.

Person who is acting as DDO/ Person deducting tax can sign the application

All information related to PAN, Aadhaar, DIN, CIN shall be online validated
by the system and Acknowledgment Receipt Number will be generated after
successful validation of all the filled information.

Status of the online filed Application can be tracked on the Common Portal.
Registration Module Screen Shots