Recommendations of the Board of Chief Engineers for implementation of GST in Works Contracts under Andhra Pradesh GST

As per the provision of Andhra Pradesh Goods and Service Tax/Central Goods and Service Tax Act 2017, all the Government work contracts executed from July 01, 2017 to August 21, 2017 attract GST at the rate of 18% with input tax credit and from August 22, 2017 at the rate of 12% with input tax credit. Further, with effect from October 13, 2017 the works contract involving predominantly earth work (that is, constituting more than 75% of the value of the work) attract 5% GST with input tax credit.

On the issues raised by the Director of Works Accounts, Andhra Pradesh, the Engineer-in-Chief (Admn.) (PAC) & Chairman, Board of Chief Engineers (BoCEs), Vijayawada has requested to issue orders on the following:

(a)    Contracts either concluded prior to or after July 01, 2017 with the SSR 2018-17 or prior SS Rates (wherein tax element is included) under the category of works:

(i)       Revised Estimates have to be approved separately duly incorporating the works executed poor to July 01, 2017 and after July 01, 2017 with GST provision as applicable from time to time.

(ii)     Supplemental agreements are to be concluded with the arrived unit rates (excluding tax element) for the work executed on or after July 01, 2017 and GST as applicable has to be added to the bill amount.

(iii)   Payments are to be allowed duly adjusting the already made payments in the intermediate bills.

(b)    Regarding implementation of basic rates without tax elements in SoR 2017-18.

Government after careful examination of the recommendations of the Board of Chief Engineers hereby accepts the following:

(a)    Since the SOR relates to the year 2017-18 and the GST was introduced with effect from July 01, 2017, reducing the unit costs of all the materials as well as hire charges, by the subsumed taxes embedded therein. The rate of GST fixed at the rate of 18% (9% CGST and 9% SGST) for the work contracts,

(b)    With effect from October 13, 2017 the works contract involving predominantly earth work (that is , constituting more than 75% of the value of the work) attract 5% GST with input tax credit,

(c)     Regarding contracts concluded prior to or after July 01, 2017 with the 2018-17 prior SSR rates (wherein tax element is included):

(i)       Revised Estimates have to be approved separately duly splitting the works executed prior to July 01, 2017 and the work done after July 01, 2017 with GST provision as applicable with the basic rates of sanctioned estimate SCR.

(ii)     Supplemental agreements are to be concluded with the arrived unit rates (excluding tax element) for the work executed on or after July 01, 2017 and GST as applicable has to be added to the bill amount

(iii)   Payments are to be allowed duly adjusting the already made payments in the intermediate bills.

Tax liability under GST shall be taken into consideration at the time of invoicing and payment them on as per the terms and conditions of the agreements between the contractors and Engineering Departments. Departments shall ensure that there shall not be any mess payments to the Agencies.

As the TDS provisions of GST Act are not in operation now, contractors are liable to discharge their tax liability fully as per the provisions of GST Act while filing the returns.

[G.O. MS. NO. 58]

URL: http://goir.ap.gov.in/reports.aspx