Dated 1st December, 2021

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Evolution of GST Rates on Composite Works contract from time to time

(From 1st July'2017 to January'2022)

At the time of introduction of GST vide Notification No 11/2017 - Central Tax Rate dated 28th June 2017,rates for GST in respect of construction services were kept at 18% with only 3 sub-categories. i.e. (i) Construction of Complex, (ii) Construction under Composite works contract and (iii) others. The rates have changed multiple times with various Notifications from time to time. In this concept note, we have taken an attempt to explain GST rate changes from time to time and corresponding rate Notification. The Table below suggest GST Rates as on 25.11.2021 considering changes made vide Notification No 15/2021 dated 18.11.2021 effective from 1stJanuary'2022 :

Chapter Head

SL No.

Description of Services

Rate

Remark

Heading 9954
(Construction Service)

3

(i) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.
(Provisions of paragraph 2 of this notification shall apply for valuation of this service)

9

Notification 11/2017-Central Rate dated 28.06.2017

 

 

(ii)Composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017

9

Notification 11/2017-Central Rate dated 28.06.2017

 

 

(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 local authority or Union Territory by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of:

  • a historical monument, archaeological site orremains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and 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

6

Vide Notification No. 20/2017-Central Rate dated 22.08.2017, this entry was introduced.

Vide Notification No. 15/2021-Central Rate dated 18.11.2021, supplies to Governmental Authority and Governmental entity has been removed against this entry.

 

 

(iv)Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,

  • a road, bridge, tunnel, or terminal for road transportation for use by general public;

 

  • a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv AwaasYojana;
  • a civil structure or any other original works pertaining to the “In-situ rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

 

  • a civil structure or any other original works pertaining to the “Beneficiary led individual house construction/enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana.
  • a pollution control or effluent treatment plant, except located as a part of a factory; or

 

  • a structure meant for funeral, burial, or cremation of deceased

 

6

Vide Notification No. 20/2017-Central Rate dated 22.08.2017, this entry was introduced.

 

 

(v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,-

  • railways, excluding monorail and metro;

 

  • a single residential unit otherwise than as a part of a residential complex;;
  • low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

 

  • low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under –
  • the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri AwasYojana;

 

  • any housing scheme of a State Government;
  • post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

 

  • post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

6

Vide Notification No. 20/2017-Central Rate dated 22.08.2017, this entry was introduced.

 

 

(vi)Services provided to the Union Territory, a local authority 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;
  • 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.

6

Vide Notification No 24/2017 dated 21.09.2017, this entry was introduced.

Vide Notification No. 15/2021-Central Rate dated 18.11.2021, supplies to Governmental Authority and Governmental entity has been removed against this entry.

 

 

(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 75 per cent. of the value of the works contract)provided to  Union territory, local authority.

2.5

Vide Notification No.31/2017dated 13.11. 2017, this entry was introduced.

Vide Notification No. 15/2021-Central Rate dated 18.11.2021, supplies to Governmental Authority and Governmental entity has been removed against this entry.

 

 

(viii)Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services, in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles from the nearest point of the appropriate base line

6

Vide Notification No.31/2017dated 13.11.2017, this entry was introduced.

 

 

 

(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 subcontractor to the main contractor providing services specified in item (iii) or item (vi) above to the Union territory, a local authority.

6

Vide Notification No. 1/2018-Central Rate dated 25.01.2018, this entry was introduced.

Vide Notification No. 15/2021-Central Rate dated 18.11.2021, supplies to Governmental Authority and Governmental entity has been removed against this entry.

 

 

(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 subcontractor to the main contractor providing services specified in item (vii) above to the Union territory, a local authority

 

Provided that credit of input tax charged on goods and services has not been taken [Please refer to Explanation no. (iv)].

2.5

Vide Notification No. 1/2018-Central Rate dated 25.01.2018, this entry was introduced.

Vide Notification No. 15/2021-Central Rate dated 18.11.2021, supplies to Governmental Authority and Governmental entity has been removed against this entry.

 

 

(xi) Services by way of house-keeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017

2.5

Vide Notification No. 1/2018-Central Rate dated 25.01.2018, this entry was introduced.

 

 

(xii)Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x) and (xi) above

9

Vide Notification No. 1/2018-Central Rate dated 25.01.2018, this entry was introduced.

4.VideNotification 24/2017 – Central Tax Rate dated 21st September 2017item (vi) was substituted

5.VideNotification31/2017 – Central Tax Rate dated 13th October 2017item (vii) was substituted

6.VideNotification 1/2018 – Central Tax Rate dated 25th January 2018 item (vii) was substituted

Thus, effective from 1stJanuary 2022, there would be a GST rate of 18% on the contracts entered into with Government Entity or Governmental Authority in relation to specified services referred at Sl. No.(iii), (vi), (vii), (ix) and (x) of table above.
It would be important to note that supplies to local Authority and Union Territory in respect of specified construction service specified under Sl. No.(iii), (vi), (vii), (ix) and (x) of table above would attract concessional rate of 12%. In this context, it is important to understand that local Authorityhas been defined under Section 2(69) of CGST Act,2017as:-

  • a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
  • a “Municipality” as defined in clause (e) of article 243P of the Constitution;
  • a Municipal Committee, a ZillaParishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund
  • a Cantonment Board as defined in Section 3 of the Cantonments Act, 2006
  • a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
  • a Development Board constituted under article 371
  • a Regional Council constituted under article 371A of the Constitution.

For ease of understanding definition of Governmental entity and Governmental authority is also provided hereunder :
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,

4Vide Notification31/2017 – Central Tax Rate dated 13th October 2017

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