GST on Centage Income earned by Govt Company

[Amit Kumar]

ABC Limited is a government company with 100 percent shares owned by State Government. They provide supervison services for Construction of Roads, Bridges. For this they receive a certain percentage of the Civil Works as CENTAGE.

So basically what happens, A Contractor XYZ Ltd for the construction services raises a Tax Invoice in the name of ABC Ltd. Suppose for Rs 100 they raised a Tax Invoice and charged 18 percent GST on it and the total Invoice Values becomes 118. Now considering Rs 100 as the civil works value ABC Ltd books a centage Income of 8 Rupees in their books. This will be paid by the concerned road construction department. Now does ABC Ltd requires to pay GST on this 8 rupees i.e. Centage Income. If no, why? If yes, then can ITC of Rs 18 be claimed?

AI Summary

GST Applicability on Government Company's Percentage Fee for Supervising Road and Bridge Construction Projects A government-owned company receives centage income for supervising road and bridge construction projects. The discussion explores whether GST applies to this percentage-based fee earned from civil works. Participants debate the tax liability, service classification, and potential input tax credit implications based on the specific contractual and billing arrangements between the government company, contractors, and road construction department.