Karnataka Authority of Advance Ruling (AAR) has ruled that works contract services for Pradhan Mantri Awas Yojana (PMAY) and constructing a police station attract 18% Goods and Services Tax (GST).
The applicant is a civil works contractor and provides works contract services. The applicant sought an advance ruling regarding the works contract services provided to:
- Karnataka Slum Development Board (KSDB) under PMAY as the main contractor.
- Belgaum Smart City Corporation Limited (BSCCL) as the main contractor.
- Karnataka Housing Board, Bangalore, for the construction of a police station
Also, the applicant sought the GST rate if the above services if he provided them as a sub-contractor.
The AAR held that only the composite supply of works contract provided by a sub-contractor to the main contractor who provides services specified in item 3(iii) or item 3(vi) to the Central Government, State Government, Union territory or a local authority is liable to tax at 12% GST.
However, the services provided by the applicant are not covered under 3(iii) to 3(vi) and fall under entry 3(xii) of Notification No.11/2017–Central Tax (Rate), dated 28th June 2017 and further amended through Notification No.03/2022–Central Tax (Rate), dated 13th July 2022 and is taxable at 18% GST.
Hence, the two-member AAR bench ruled that works contract services executed to the KSDB under PMAY, as the main contractor or sub-contractor, attract 12% GST till 17the July 2022 and is liable for 18% GST w.e.f 18th July 2022.
Also, the AAR ruled that the works contract service provided to BSCCL either as main contractor or sub-contractor and Karnataka Housing Board for construction of police station will also fall under the same category and attract 12% GST till 17th July 2022, and after that, 18% GST.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@clear.in
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
