TaxTMI 
TaxTMI 
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Dear All Experts,
Kindly throw your valuable opinion on whether value of Free cost material should be included in works contract value for the purpose of charging GST
Inclusion of Free issue material in Works contract value
10 Oct 2017 
7 Replies 
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Inclusion of free issue materials: treated as part of works contract consideration and taxable under GST.
Free issue materials supplied by a contractee are generally treated as part of the consideration of a works contract and included in the taxable value under the CGST valuation provision; historically this addressed ambiguity under service tax. Inclusion may nevertheless turn on contract wording-if the contract clearly allocates supply of specified materials to the contractee free of cost, those materials may not constitute the contractor's consideration. (AI Summary)
Free issue materials supplied by a contractee are generally treated as part of the consideration of a works contract and included in the taxable value under the CGST valuation provision; historically this addressed ambiguity under service tax. Inclusion may nevertheless turn on contract wording-if the contract clearly allocates supply of specified materials to the contractee free of cost, those materials may not constitute the contractor's consideration. (AI Summary)