Hike in GST rate on Works Contract Services for specified Contracts to
Government Authority and Government Entity w.e.f 01.01.2022.
Works contract services provided for specified contracts to Government Authority or Government Entity have been excluded from the reduced tax rate entry of GST @5%/12% w.e.f 01.01.2022 vide Notification No. 15/2021 Central Tax (Rate) dated 18.11.2021.
Thus, those specified works contract services will be taxable at residual tax rate @18% under entry 3 (xii) of tax rate notification no 11/2017- CT(R) w.e.f 01.01.2022.
The changes made in the entry no 3 of tax rate notification no 11/2017- CT(R) are as under:
Changes in GST rate for Works contract applicable from 01.01.2022
Sl No
Chapter, Section or Heading
Description of service
Old Rate (percent)
New Rate (percent)
Condition
3
Heading 9954 (Construction Service)
(iii) Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Central Government, State Government, Union territory, a local authority, a GovernmentalAuthority or a GovernmentEntity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, –(a) historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and
12%
18%
Provided thatwhere theservices aresupplied to aGovernmentEntity, theyshould havebeen procuredby the saidentity inrelation to awork entrustedto it by theCentralGovernment,StateGovernment,Union territoryor localauthority, as thecase may be.
Archaeological Sites and Remains Act, 1958 (24 of 1958);canal, dam or other irrigation works;pipeline, conduit or plant for(i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.
(vi) Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, provided to the Central Government, State Government, Union Territory, a local authority, a GovernmentalAuthority or a GovernmentEntity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or(c) a residential complex predominantly meant for self- use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017. Explanation. – For the purposes of this item, the term ‘business’ shall not include any activity or transaction undertaken by the
12%
18%
Provided thatwhere theservices aresupplied to aGovernmentEntity, theyshould havebeen procuredby the saidentity inrelation to awork entrustedto it by theCentralGovernment,StateGovernment,Union territoryor localauthority, as thecase may be
Central Government, a State Government or any local authority in which they are engaged as public authorities
(vii)Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75per cent. of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority,a Governmental Authority or aGovernment Entity.
5%
18%
Provided thatwhere theservices aresupplied to aGovernmentEntity, theyshould havebeen procuredby the saidentity inrelation to awork entrustedto it by theCentralGovernment,StateGovernment,Union territoryor localauthority, as thecase may be
(ix) Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub- contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, aGovernmentalAuthority or a GovernmentEntity.
12%
18%
Provided thatwhere theservices aresupplied to aGovernmentEntity, theyshould havebeen procuredby the said entityin relation to awork entrustedto it by theCentralGovernment,StateGovernment,Union territoryor localauthority, as thecase may be.
(x) Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub- contractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a GovernmentalAuthority or a GovernmentEntity.
5%
18%
Provided thatwhere theservices aresupplied to aGovernmentEntity, theyshould havebeen procuredby the said entityin relation to awork entrustedto it by theCentralGovernment,StateGovernment,Union territoryor localauthority, as thecase may be.
The definition of Government Authority and Government Entity is extracted hereunder:
‘Governmental Authority‘ means an authority or a board or any other body, –
set up by an Act of Parliament or a State Legislature; or
established by any Government,
with 90per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution.
‘Government Entity‘ means an authority or a board or any other body including a society, trust, corporation,
set up by an Act of Parliament or State Legislature; or
established by any Government,
with 90per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.’.]
