gst for small work contractors

[vikram bindra]

hi i am a small businessman with annual turnover abt 20 lacs , iam into installation of fountains , which includes complete fitting on turnkey basis, it includes providing of material and labour watever required for completion , what are my tax laibilities, my materials include electrical panel , pumps , sanitary fiitings lights, electrical and so on

i work for local bodies too i mean municipalities , besides private small contracts

these contracts may be in different states

[ANITA BHADRA]

Dear Sir

Your work will be considered as work contract and you need to register as a normal registered person u/s 22 of GST Act .Since work contract is treated as service you can not opt for composition scheme

Works contract is a mixture of goods and services but it is neither a composite supply nor a mixed supply as it has been defined as per Sec. 2(119) of CGST Act

Schedule II ( Entry 6(a)) which states that such composite supplies which includes labour and material both shall be treated as a supply of services namely:-Works contract under S. 2(119)”

Regards

[vikram bindra]

Thanks Anita ji for your reply , so thr is no need fr having multiple GST nos , right ?

rate of tax 18% for private and 12% for govt contracts ?

besides if i purchase a material from other state and have small contract in that particular state can i avail input credit , for example if i have private contract of 1 lac in other state jammu and i purchase piping to be used in this for jammu , can i get input credit for this , in addition to this i will have to send some other material too from my parent state HP to jammu., my purchase is mostly interstate.

thanks n warm rgds

AI Summary

Work contract classification as service requires GST registration and bars composition scheme, raising input tax credit questions. Classification of turnkey installation contracts as work contracts requires GST registration as a normal taxable person; work contracts combining materials and labour are treated as a supply of services under Schedule II (entry 6(a)) and S.2(119), and cannot access the composition scheme. Operational issues about tax rates for private versus government contracts and eligibility for input tax credit on interstate material purchases are raised but not decided.