pure labour under construction contract gst
Query (Issue) Started By: – tarun verma Dated:- 12-7-2017 Last Reply Date:- 21-2-2018 Goods and Services Tax – GST
Got 8 Replies
GST
sir please explain concept of pure labour under construction contract under gst regime…
if individual involve in construction service and hire labour from market on daily basis..pay daily wages to them ..
gst liabillity on the individual…
please guide me on this topic…
Reply By KASTURI SETHI:
The Reply:
Exempted vide notification no.12/17-Central Tax Rate dated 28.6.17 Serial No.11 Heading No.9954.
Reply By GOKARNESAN.S SUBRAMANIAN:
The Reply:
Mr. Tarun Varma
You have stated that an individual involve construction service. But you have not specify whether the individual is rendering pure labour contract only in the construction activity. In other words, materials supplied by the receiver and the individual undertake only labour work by getting hired daily labour or not. Further, you ha
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nder the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.
Nil
Nil
11
Heading 9954
Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex.
As such, the above exemption under serial number 11 is not applicable to you if the individual does
a) construction work as a whole including labour
b)if such construction involve multiple units (more than one dwelling unit)
On the other hand, if the individual does only pure labour contract in the construction activity then he is entitled to exemption subject to conditions stipulated in serial number 11 of the table.
FOR ENGAGING LABOUR FROM
The labour hired from outside are to be treated as "Un-registered persons under GST". Hence, the GST liability on the value of labour paid lies on the service receiver under reverse charge. Again if the individual contractor un
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dence get exempted..not being multi residence
c) is there is exemption limit on service receive from unregistered person …like in goods limit is 5000 per day
d) in case of rcm liability to pay tax on contractor ,not on service receiver
Reply By GOKARNESAN.S SUBRAMANIAN:
The Reply:
Mr. Tarun Verma
I answer your queries:
Query: a) As you stated individual under take construction contract( material + labour ) , he will discharge liability @18% with taking input tax credit on goods and services.this activity amount to work contract..and in case of work contract no ITC available.because emerging property is immovable.?
My Answer:-
As a contractor, doing a works contract service – construction service to your customer, you are entitled to take credit of GST involved on goods and services consumed to do the said output supply namely ' works contract;. Full credit is eligible on goods and services.
On the other hand, for the customer who avails the 'works contract construct
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eived by a registered person from any or all the suppliers, who is or are not registered, exceeds Five thousand rupees)
Hence, you have to see the aggreagate value of supply, service or both in a single day from all suppliers to decide the eligibility within ₹ 5000/-
Query -d) in case of rcm liability to pay tax on contractor ,not on service receiver
Answer: This query is not clear. However, the RCM liability on the service receiver . In your example: the contractor received the service of manpower (un registered dealers) and utilise in his works contract service. Hence, the contractor is liable to discharge tax under reverse charge and after making payment, he can take credit as input tax credit of such amount. As far as the availment of manpower services by the contractor, he is the service receiver and not the person to whom the contractor render construction services.
S. Gokarnesan
Advocate
Reply By tarun verma:
The Reply:
thanks to sir. Gonkarnesen Subramanian for ans
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abour @ 500 per day amounts to 5000 per day..so he will not cover under RCM.
Reply By tarun verma:
The Reply:
under gst if construction contractor cover under RCM by getting service from labour ( i.e unregistered ) so he will have to get registration under gst, irrespective of thereshold limit ( 20 lakhs.)
Reply By MELVIN KOSHY:
The Reply:
Assume a Contractor who is quoting for a Govt. Dept Work.
An illustration on arriving at final rate of an item by a Contractor for an item to be quoted in price bid is as follows
BASIC PRICE (A)
Subtract DISCOUNT (B)
Add TRANSPORTATION (C)
Add PROFIT (D)
Add GST at 18% on (A+B+C+D) = (E)
TOTAL (F) = A+B+C+D+E
Amount quoted by Contractor in price bid = F
As we know, Govt. Dept will incur 12% towards GST on Works Contract offered by the Contractor. Whether Contractor will add 12% to the above value (F) and put his quote in the price bid?
Please give your thoughts
Reply By vinodh raj:
The Reply:
Sir,
I have doubt.
My friend was pure labour wo
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