Service tax on Govt projects-reg

[N Balachandran]

Dear sir,

Can u please clarify that the Works contract / Construction acitivities  involved  the Design , Supply, Laying of pipes, Erection including the Civil works  for  Water  & Sewage treatment plant, Water supply projects & under ground drainage system which are  being executed for Govt depts like Water supply & sewage board, infrastructure development authority & Municipal corporation etc, are covered under the service tax net ? or not ?.

Is there any specific exemption available for this projects?

Regards

N.Balachandran

[rakshit verma]

Narration of work given by you is fully covered under the service of Works Contract. Even the sub-contractors rendering the part of service are covered under the specific service rendered by them, as also clarified by the CBEC Board by Circular dated 06.5.2011. 

Rakshit verma

[email protected]

[Vijay Chitte]

Works is not in commercial in Nature. It is exempt from service tax.

Construction of School, Government Offices , Hospitals , Housing Projects are basically non - profit making activities and are excluded from the perview of service Tax. However, if any of these activities are carried out by the Govt for making profits expressly or impliedly then it would become taxable.

Notification 41/2009-ST Specific exemption has been granted to contruction of Canals, Also refer Circular 116/10/2006-ST

AI Summary

Works Contract taxability may apply to government water and sewage projects unless specific exemptions for non commercial government construction apply. Design, supply, laying, erection and related civil works for water, sewage and drainage projects are characterised as Works Contract services and taxable, with subcontractors liable under the specific service rendered; however, non commercial government construction projects may be exempt where exemption notifications and circulars apply and where no profit motive exists.