GST applicable on water projects for Water & Sewage Board

[N Balachandran]

Sir,

Can u please clarify , Whether GST @ 12% or @18% is applicable on Water supply Projects being executed for Municipal Corporation ( Local authority ). Since the works contract executed for Central and state Govt is attracting @ 18% w e f 01 01 2022 as per the recent notification.

Regards

N Balachandran

[KASTURI SETHI]

The word, 'Local Authority' has not been omitted. 12 % continues. For more details, see Issue ID 117699 dated 14.12.21.

[SOWMYA CA]

Works contract will constitute a supply of service and a uniform rate of tax applicable on same value across India. 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 Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, -(c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal - 6% CGST + 6% SGST

[CA Hemanth Kumar]

3[(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 12[Central Government, State Government, 129[Union territory or a local authority]] by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, -

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);

canal, dam or other irrigation works;

pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.

This entry covers local authority also. rate of tax will be 12 %

[KASTURI SETHI]

Dear Sir,

Comprehensive and excellent reply by you. In continuation to your reply I am adding some thing.

"canal, dam or other irrigation works;"

Construction of canal and dam will be eligible for concessional rate of 12 % only if meant for irrigation purpose. Just added. Not deficiency in your reply.

[N Balachandran]

Thanks to all who have shared their opinion and clarification in respect of query raised by me

[Amit Agrawal]

There is no change in tax-rate (i.e. 12%) if service-recipient is 'Central Government, State Government, Union territory or a local authority'.

However, tax-rate has increased from 12% to 18% w.e.f. 01.01.2022 when service-recipient is 'a Governmental Authority or a Government Entity'.

Subject of the query says service-recipient as 'Water & Sewage Board' wherein details of query states that 'Water supply Projects being executed for Municipal Corporation (Local authority)'

Now, generally speaking, such types of board does not fall into category of 'Central Government, State Government, Union territory or a local authority'. And they typically falls under 'a Governmental Authority or a Government Entity' who in-turn work for 'Central Government, State Government, Union territory or a local authority'

I suggest that one must first decide 'who is service-recipient and status thereof' before continuing with tax-rate @ 12%. If service-recipient is 'a Governmental Authority or a Government Entity' (& not a local authority), then tax-rate has increased to 18% w.e.f. 01.01.2022 onwards.

Above views are strictly personal and same should not be taken as professional advice.

AI Summary

GST rate distinction for public water and sewage projects hinges on recipient status; confirm local authority versus governmental entity. Composite works contracts for pipeline, conduit or plant for water supply, water treatment or sewerage treatment supplied to the Central Government, State Government, Union territory or a local authority attract the concessional 12% rate (6% CGST + 6% SGST). With effect from 01.01.2022, supplies to a governmental authority or government entity attract a higher rate; therefore the applicable rate for a Water & Sewage Board depends on whether it is a local authority or a governmental authority/entity, and canals/dams qualify for concessional treatment only if for irrigation.