Works Contract under GST

‘Works Contract’ means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.

The term works contract has been restricted to contract for building construction, fabrication, etc., of any immovable property only. Any composite supply undertaken on movable property such as fabrication or painting job done in automotive body shop or annual maintenance contracts, will not be covered under works contract as defined in the GST Act. Such contracts would be treated as composite supplies and not as Works Contracts for the purposes of GST.

Supply of Service:

The composite supplies of works contract shall be treated as supply of services under GST.

GST on Works Contract & Real Estate Transactions by V.S. Datey. This book provides complete & updated coverage of the subject matter incorporating issues pertaining to Projects, TDR, Development Rights, FSI, Leasing & Renting along with Numerical Illustrations. Updated till 1st February 2022

GST Rates of Works Contracts:

S. No.

Description

Applicable GST Rate

Composite supply of works contract supplied to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of—

• a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

• canal, dam or other irrigation works;

• pipeline, conduit or plant for water supply, water treatment, sewerage treatment or disposal

• a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession

• a structure meant predominantly for use as an educational, a clinical, or an art or cultural establishment

• a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the CGST Act, 2017 such as Members of Parliament, Panchayats, other local authorities, etc.

Note:-This will also include composite supply of works contract provided by a sub-contractor to the main contractor in respect of abovementioned services to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity.

Composite supply of works contract supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of—

i) a road, bridge, tunnel, or terminal for road transportation for use by general public

ii) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awas Yojana

iii) a civil structure or any other original works pertaining to the “In-situ redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban)

iv) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction/enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana

v) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban)

vi) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/Lower Income Group (LIG)/Middle Income Group-1 (MIG-1)/Middle Income Group-2 (MIG-2)” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban)

vii) a pollution control or effluent treatment plant, except located as a part of a factory; or

viii) a structure meant for funeral, burial or cremation of deceased

ix) a building owned by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961), which is used for carrying out the activities of providing, centralised cooking or distribution, for mid-day meals under the mid-day meal scheme sponsored by the Central Government, State Government, Union territory or local authorities