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GST RATES FOR CONSTRUCTION SECTOR ( As amended upto 20-02-2018)

CASanjay Kumawat
GST Rates for Construction Updated: Key Services and Rates from 2.5% to 9% Under CGST Act, 2017 The GST rates for the construction sector, as amended up to February 20, 2018, specify various tax rates for different construction services under the Central Goods and Services Tax Act, 2017. Key services include construction of buildings, works contracts, and services related to infrastructure projects like roads and railways. The rates range from 2.5% to 9%, depending on the service type and recipient, such as government entities or private sectors. Specific conditions and exemptions apply, particularly for services involving government contracts or housing projects under national housing schemes. Amendments and notifications have refined these provisions over time. (AI Summary)

In exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:-

1. Tax rates:

S.No.

Chapter, Section or Heading

Description of Service

Rate (%)

Condition

(1)

(2)

(3)

(4)

(5)

1

Chapter 99

All Services

  

2

Section 5

Construction Services

  

3

Heading 9954

(Construction services)

(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

-

  

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

9

-

  

Upto 21.08.2017 :

(iii) Construction services other than (i) and (ii) above.

From 22.08.2017 :

(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 the “Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity” [amended by Notification No. 31/2017-CT(R), dated 13.10.2017; Upto 12.10.2017  read it as “Government, a local authority or a Governmental authority”] by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, -

  1. a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
  1. canal, dam or other irrigation works;
  1. pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.

[Point (iii) amended by Notification No. 20/2017-CT(R), dated 22.08.2017]

 

 

9

 

 

 

-

  

6

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

[Inserted by Notification No. 31/2017-CT(R), dated 13.10.2017]

  

(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,-

  1. a road, bridge, tunnel, or terminal for road transportation for use by general public;
  1. a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;
  1. “a civil structure or any other original works pertaining to the “ln-situ redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban).”

[Amended by Notification No. 01/2018-CT (R) dated 25.01.2018; upto 24.01.2018 read it as “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;”]

  1. 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;

(da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);

(db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’

[Point (da) and (db) has been inserted by Notification No. 01/2018-CT (R) dated 25.01.2018]

  1. a pollution control or effluent treatment plant, except located as a part of a factory; or
  1. a structure meant for funeral, burial or cremation of deceased.
  1. a building owned by an entity registered under section 12AA of the Income Tax Act, 1961 (43 of 1961), which is used for carrying out the activities of providing, centralised cooking or distribution, for mid-day meals under the mid-day meal scheme sponsored by the Central Government, State Government, Union territory or local authorities. [Point (g) has been inserted by Notification No. 01/2018-CT (R) dated 25.01.2018]

[Point (iv) inserted  by Notification No. 20/2017-CT(R), dated 22.08.2017]

6

-

  

(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,-

  1. railways, “including” [amended by Notification No. 01/2018-CT (R) dated 25.01.2018; Upto 24.01.2018 read it as  “excluding”] monorail and metro;
  1. a single residential unit otherwise than as a part of a residential complex;
  1. 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;
  1. low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under-

1. the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

2. any housing scheme of a State Government;

(da) low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017.

[Point (da) has been inserted by Notification No. 01/2018-CT (R) dated 25.01.2018]

  1. post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or
  1. mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.

[Point (v) inserted  by Notification No. 20/2017-CT(R), dated 22.08.2017]

6

-

  

Upto 20.09.2017

(vi) Construction services other than (i), (ii), (iii), (iv) and (v) above.

[Point (vi) inserted  by Notification No. 20/2017-CT(R), dated 22.08.2017]

From 21.09.2017

(vi)Services provided to the Central Government, State Government, Union Territory, a “local authority, a Governmental Authority or a Government Entity” [amended by Notification No. 31/2017-CT(R), dated 13.10.2017; Upto 12.10.2017  read it as “local authority or a governmental authority”] by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

  1. a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
  1. a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or
  1. 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.

[Point (vi) amended  by Notification No. 24/2017-CT(R), dated 21.09.2017]

9

 

 

 

 

-

  

6

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

[Inserted by Notification No. 31/2017-CT(R), dated 13.10.2017]

  

Upto 12.10.2017:

(vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above.

[Point (vii) inserted  by Notification No. 24/2017-CT(R), dated 21.09.2017]

 

From 13.10.2017

 

(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 a Government Entity.

[Point (vii) amended by Notification No. 31/2017-CT(R), dated 13.10.2017]

9

 

 

 

 

-

  

2.5

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

  

(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.

[Inserted by Notification No. 31/2017-CT(R), dated 13.10.2017]

6

-

  

Upto 24.01.2018 :

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

[Inserted by Notification No. 31/2017-CT(R), dated 13.10.2017]

From 25.01.2018:

(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, a Governmental Authority or a Government Entity.

[Point (ix) has been amended by Notification No. 01/2018-CT (R) dated 25.01.2018]

9

 

 

 

 

-

  

6

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case 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 Governmental Authority or a Government Entity.

[Point (x) has been inserted by Notification No. 01/2018-CT (R) dated 25.01.2018]

2.5

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

  

(xi) Services by way of housekeeping, 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.

[Point (xi) has been inserted by Notification No. 01/2018-CT (R) dated 25.01.2018]

2.5

Provided that credit of input tax charged on goods and services has not been taken

[Please refer to Explanation no. (iv)].

  

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

[Point (xii) has been inserted by Notification No. 01/2018-CT (R) dated 25.01.2018]

9

-

 
  1. In case of supply of service specified in column (3), in item (i); sub-item (b), sub-item (c), sub-item (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the Table above, involving transfer of land or undivided share of land, as the case may be, the value of such supply shall be equivalent to the total amount charged for such supply less the value of transfer of land or undivided share of land, as the case may be, and the value of such transfer of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation. –For the purposes of this paragraph, “total amount” means the sum total of,-

  1. consideration charged for aforesaid service; and
  2. amount charged for transfer of land or undivided share of land, as the case may be including by way of lease or sublease.”

[Point 2 has been amended by Notification No. 01/2018-CT (R) dated 25.01.2018; Upto 24.01.2018 read it as

“2. In case of supply of service specified in column (3) of the entry at item (i) against serial no. 3 of the Table above, involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

  1. consideration charged for aforesaid service; and
  2. amount charged for transfer of land or undivided share of land, as the case may be.”]
  1. Value of supply of lottery shall be 100/112 of the face value or the price notified in the Official Gazette by the organising State, whichever is higher, in case of lottery run by State Government and 100/128 of the face value or the price notified in the Official Gazette by the organising State, whichever is higher, in case of lottery authorised by State Government.
  1. Explanation.- For the purposes of this notification,-

(i) Goods includes capital goods.

(ii) Reference to “Chapter”, “Section” or “Heading”, wherever they occur, unless the context otherwise requires, shall mean respectively as “Chapter, “Section” and “Heading” in the annexed scheme of classification of services (Annexure).

(iii)  The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of heading 9988.

(iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,-

  1. credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and
  1. credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.

Notes:

  1. The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 11/2017 - Central Tax (Rate), dated the 28th June, 2017, vide number G.S.R. 690 (E), dated the 28th June, 2017 and was last amended by notification No. 20/2017-Central Tax (Rate) dated the 22nd August, 2017 vide number G.S.R. 1045(E), dated the 22nd August, 2017.
  1. The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 11/2017 - Central Tax(Rate), dated the 28th June, 2017, vide number G.S.R. 690 (E), dated the 28th June, 2017 and was last amended by notification No. 24/2017-Central Tax (Rate)dated the 21st September, 2017vide number G.S.R. 1179(E), dated the21st  September, 2017.
  1. The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 11/2017 - Central Tax(Rate), dated the 28th June, 2017, vide number G.S.R. 690 (E), dated the 28th June, 2017 and was last amended by notification No. 31/2017-Central Tax (Rate), dated the 13th October, 2017.
  1. Rates are updated Notification issued upto 20.02.2018.
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