GST APPLICABILITY ON TRANSACTION WHETHER IT IS SUPERVISION CHARGES OR WORK CONTRACT

[VIPUL JAIN]

Respected Members,

My client is a government entity which undertakes the work of construction of immovable property on behalf of other government departments/authorities/board/entity etc (herein after referred as govt.).

While allocating the work to my client they mention the cost of construction and fixed percentage of supervision charges, my client then publish and issue the tender to sum other contractor , my client add its supervision charges on what ever the bill is raised by the tender allotee and issue a demand note to govt, for example:

Cost of construction: 100

Cost of Interior : 50

Total Cost : 150

Supervision charges (5% of total cost) : 7.5

My question is whether the invoice should be raised under work contract as 157.5 + GST or invoice should be raised under supervision charges as 7.5 + GST

Further i would like to add that 150 is the actual cost my client only adds its fixed percentage of supervision charges.

AI Summary

Debate on GST Application: Should GST Apply to Total Project Cost or Just Supervision Fees? A government entity client undertakes construction projects for other government bodies and charges a fixed percentage as supervision fees. The query is whether GST should be applied to the total project cost including supervision charges or solely on the supervision charges. One response suggests treating the client as a 'pure agent,' invoicing 150 without GST and 7.5 with GST. Another suggests that if the client is responsible for construction, it should be treated as a works contract service, implying GST on the total amount. A third response advises GST on the entire amount of 157.50.