GST on Interes,new project etc

[Narendra Soni]

Kindly provide your valuable advise,how we can save GST, if applicable in the following cases :-

1.Interest charged from customer for overdue payment.

2.Amount charged from customer for early delivery of shipment.

3.We procured material & services for electricity supply line from feeder to new factory:-

We purchased Poles & Wires from market vendors and given to our contractors(service providers) for installation on road from feeder to factory.

Some incidental material required to fit the wires on poles like-clam/nut/bolts/aluminum wire/earthing wire/insulators/hdpe pipes are bring by our contractor (Service provider) for this commissioning.

In new factor-Transformer,DG set, street lighting,cable ,wire will also install.

Our intention is not to pay GST, please guide.

[Ganeshan Kalyani]

It amounts to wilful evasion of tax. We should not do it. Let us help building the nation by paying the applicable tax.

[KASTURI SETHI]

Dear Querist,. I understand you want legal benefit. All your activities fall under Works Contract Service and attract GST . No chance to avoid it as per GST law.

[Narendra Soni]

Dear Sir, my mistake.actually GST is applicable,hence we will pay.no issue.

my query is how can we avail ITC on these works.Any suggestions of assigning the work by which ITC could be eligible.

Kindly suggest.

[Ganeshan Kalyani]

Dear Sri Soni Ji, please refer Section 16 of CGST Act, 2017. In restriction of input tax credit it is mentioned that credit is not allowed if works contract services supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.

[Narendra Soni]

Ok sir.

What about point 1 & 2.

[KASTURI SETHI]

On both points no.1 & 2 GST is applicable.

[Himansu Sekhar]

Please refer to sec 17(5), the poles and wires are located about side the factory premises. The availability of ITC on such materials is doubtful

[Himansu Sekhar]

Early delivery charges are incvludible in the transaction value.

[KASTURI SETHI]

Dear Querist,

Sh.Himansu Sekhar has rightly advised you. Section 17(5) is full of 'ifs' and 'buts'. I mean to say so many strings are attached. You are to examine admissibility in view of definition of 'in course or furtherance of business' viz-a-viz conditions contained in Section 17 (5) of CGST. Each and every items has to be examined.

In my view, ITC is admissible except where specifically excluded from the definition of ITC.

[Himansu Sekhar]

Thank you sir.

AI Summary

GST on interest and ancillary charges is taxable, with input tax credit subject to statutory ITC restrictions and item by item scrutiny. GST applies to interest for overdue payments and early delivery charges as part of taxable value. Works contract services for installation and supply of items for a new factory attract GST, and input tax credit is restricted where works contracts concern construction of immovable property (other than plant and machinery) and by other statutory exclusions; ITC availability must be examined item by item against those restrictions.