GST rate on Water Treatment plant for water supply scheme

[N Balachandran]

Sir,

We have recd the order from Drinking Water & Sanitation Dept , Govt of different states for supply and installation and Maintenance of conventional water treatment plant for Rural pipe water supply scheme. . The Central Board of Indirect Taxes (CBIC) has recently increased the rate of GST from @12% to 18% on works contract services involved in the execution of government contracts vide Notification Number 15/2021 - Central Tax (Rate) dated 18.11.2021 which amended Notification Number 11/2017- Central Tax (Rate), dated the 28th June, 2017 (this notification was already amended several time, so it should be read in conjuncture with latest amendment made). As per the said notification, CBIC has substituted the words – “Union territory, a local authority, a Governmental Authority or a Government Entity” with the words – “Union territory or a local authority” which is going to be effective from 01.01.2022.

In view of the above, what will be GST rate is applicable on the above projects

Thanks with Regards

N Balachandran

[KASTURI SETHI]

Pl.go through the replies in respect of Issue ID 117699 dated 17.12.21.

AI Summary

GST rate on works contracts altered by notification narrowing beneficiary categories, raising applicability questions for government water supply projects. The query concerns whether recent amendment to the GST rate schedule, which increased the rate on works contract services and narrowed the class of beneficiaries by removing certain government entity references, causes supply, installation and maintenance contracts for conventional water treatment plants commissioned by a State Drinking Water & Sanitation Department to attract the revised higher rate rather than any earlier concessional treatment; resolution depends on the amended beneficiary definitions and characterization of the contract as a works contract.