GST surge with 18% for the government contracts shall come into compliance in January 2022 and might influence the infra projects and maintenance of the work in states. In the current times, the GST rate for the government is 12%, and the rate towards the private work contract is 18% GST rate. The same point towards the subsequent year GST rate towards both the government as well as the private contracts shall be identical.
The rate is subjected towards the public-funded government contracts towards the activities like the construction of buildings, commissioning, installation, repair, reconstruction, and maintenance. Also, the work of the historic and memorial buildings’ archaeological sites will get affected. Similarly, the activities like the construction of the canal system, water distribution projects, and laying of pipelines would be negatively influenced.
The tax professionals shall also signify the surge in the rates will prove to be the load on the small and medium scale government projects which are in halt because of the financial issues. There are various people who had worried about the decision of the government who is attempting to provide much more space to the bigger companies during the time when the cost of the construction has surged.
Also at that time, the framework of the Value Added Tax (VAT) occurred in the space of the tax rate towards the government contract was only 4%. It is notified that when the GST rate was executed then the rate was 18%. Furthermore the same was diminished to 12%. But the same does not draw any benefit to the states as the surging rate was 8%. The same shall build the contractors to meet the amended 8% from their end. But they have not obtained the arrears from the government yet.
But the newer contractors were permitted to imbibe 12% in their analysis, they are also needed to cover the other 6% i.e 18% which is an amended rate w.e.f January.
As per Varghese Kannammppilly, president of Kerala Government Contractors Association, they asked the government to clear out the bills from Jan post to acknowledge the revision in the GST rate which does not been approximated.
