Govt Civil Contracts

[Tanmay Sharma]

Dear Readers Greetings,

What is the GST "Taxable Amount" And "Tax Amount" in the following case of Govt Civil Contractor?

Say, Gross Amount (also tendered amount) for a project = 1,00,000/- including all taxes complete, alloted to the contractor by a govt Deptt. say PWD. (TDS@2%=2000/-,Labour-cess@1%=1000/- and income tax@2%=2000/-) total of 5000/- is deducted from the above Gross Amount by the govt departmentand remaining 95000/- is paid to the contractor.

What is the tax amount?

AI Summary

Taxable value under GST: inclusive contract price treated as transaction value and GST computed after grossing down.
Contract price tendered as a tax-inclusive lump sum is to be treated as the transaction value for GST; deductions such as TDS and income tax are not deductible from that transaction value when computing GST. The taxable value is extracted from the inclusive gross by grossing down for the applicable GST rate, and GST is computed on that extracted pre-tax value. Debates remain about whether labour cess and similar levies form part of the transaction value, and amounts identified as royalty may attract GST under the reverse charge mechanism.