1. Works Contract under GST
29 April 2017

2. Definition - Works contract
Contract for building, construction, renovation etc.
Immovable property
Transfer of property in goods

3. Whether Works contract service – Outsourced scenario
Maintenance of an Immovable property
Supply of labour
(Maintenance Service or works contract ???)
Contractor
Awarder of the Contract
Supply of material and labour
(Works Contract)
Subcontractor

4. Aspects of GST
Valuation
Time of supply
Place of supply
Rate
Supply

5. Supply Supply Supply of Goods Supply of Services Composite Supply
Mixed Supply
Supply
Supply of immovable property outside GST

6. Composite or Mixed Supply
Composite supply
Two or more taxable supplies
Goods, services or combinations
Naturally bundled
Supplied in conjunction
E.g. site formation service for construction
Mixed supply
Two or more individual supplies
for a single price
Other than composite supply
Tax liability on supply as applicable to principal supply
Tax liability on supply as applicable to supply with highest rate of tax

7. Immoveable property (Service)
Types of supply
Supply categories
Goods
Supply of machine
Services
Installation service
Mixed supply
Composite supply
Moveable property
(Principal supply)
Immoveable property (Service)
Plant and Machinery
Creditable
Civil work
Non
creditable

8. Place of supply PO raised to construct wall in Maharashtra ABC Ltd
Contractor in Maharashtra
PO raised to construct wall in Gujarat
Place of supply of service in relation to an immovable property shall be the location of an immovable property
Location of Supplier
Maharashtra
Place of Supply/ Consumption
Maharashtra
Gujarat
Nature of Supply
Intra-State/ local
Inter-State

9. Time of Supply of Service
Earlier of date of invoice or payment (if invoice issued within prescribed time period)
Earlier of date of provision of services or date of payment
(if invoice not issued within prescribed time period); or
In all other cases, date on which the customer shows
receipt of services in his books of account.
Time of Supply of Services – Forward Charge
In case of Continuous Supply of Service:
Payment milestone
Earliest of date of invoice / payment receipt for no
milestone
If payment linked to completion of event - Completion
of event
Time of Supply of Services – Forward Charge
GST on advances ……..

10. Value of Supply of Service
Transaction value, which is the price actually paid or payable for the said supply of goods or services
Amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply
Abatements - ???
Deduction of land value – Currently not provided
Any taxes, duties, fees and charges levied under any statute other than the GST levy to be added

11. Business model – 1 (Free Supply)
Sub-contractor
VAT 5.5%
Service Tax 6%
GST 18%
Contractor
GST paid on material procured by awarder of the contract would become cost
GST 18%
Free supply
VAT 5.5%
Service Tax 6%
Excise duty 12.5%, CST 12.5%, VAT 5.5 % / 15%
Awarder of contract
Supplier
GST 12% / 18% / 28%

12. Business model – 2 (Sourcing through contractor)
GST paid on material procured by Contractor would be creditable
Sub-contractor
VAT 5.5%
Service Tax 6%
GST 18%
Excise duty 12.5%, CST 2%, VAT 5.5 % / 15%
Supplier
Contractor
GST 12% / 18% / 28%
GST 18%
VAT 5.5%
Service Tax 6%
Awarder of contract

13. Business model – 3 (Developer)
VAT 5.5%
Service Tax 6%
Contractor
Sub-contractor
GST 18%
Excise duty 12.5%, CST 2%, VAT 5.5 % / 15%
Free supply
VAT 5.5%
Service Tax 6%
GST 18%
GST 12% / 18% / 28%
Supplier
Developer
Excise duty 12.5%, CST 12.5%, VAT 5.5 % / 15%
GST 12% / 18% / 28%
GST paid on material procured by Developer would become cost
VAT 1%
Service Tax 4.5%
GST 18%
Customer

14. Input Tax Credit
No credit of works contract service if resultant property is immovable (except plant and Machinery) except used as an input service for further supply of works contract service
No credit on goods and services used for construction of an immovable property if the said construction is on its own account
Deferred credit of GST on advances if services are procured later
Credit available subject to payment to vendor within 180 days – Retention money ????
Credit available even on structural support of plant and machinery

15. Transitional provisions
Goods and services supplied after the appointed day for which contract was entered prior to appointed day would attract GST
Goods and services supplied prior to the appointed day to attract VAT and Service Tax as applicable
Availability of credit of VAT and service tax paid under existing law to the extent supplies made after the appointed date
Construction service provider paying service tax on 30% of value under 26/2012, would be allowed credit of taxes paid on inputs subject to availability of duty paying document or 40% of the CGST payable in absence of such document
Transitional credit would be reduced to the extent of outstanding declaration forms under CST laws

16. Other Compliance related issues
Works contract
TDS
Reverse charge
E-way bill
Registration
HSN of goods or SAC of services
Mismatch of credit

17. Thank you