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Home >> Dehradun

Hike in input cost, GST component a worry for PWD contractors

| Tuesday | 18th July, 2017

DEHRADUN: With the Goods and Services Tax (GST) coming into effect on July 1, contractors involved in high-value construction projects in the hill state are a worried lot. “Suppose I have payment of Rs 1 crore to be collected for a project done before GST and the PWD is paying me Rs 1 crore, it is not clear who will pay the 18 % GST, which come to Rs 18 lakh. “Currently, there is no provision to incorporate GST in tender work that has been awarded prior to the implementation of the tax. However, we are checking to see how we can resolve the issue,” said a senior official of the department. A number of contractors have alleged that state government agencies are not clear on how to pay for the GST component of the completed work for which the price was worked out before the new tax regime was implemented.

DEHRADUN: With the Goods and Services Tax (GST) coming into effect on July 1, contractors involved in high-value construction projects in the hill state are a worried lot. A number of contractors have alleged that state government agencies are not clear on how to pay for the GST component of the completed work for which the price was worked out before the new tax regime was implemented. “Suppose I have payment of Rs 1 crore to be collected for a project done before GST and the PWD is paying me Rs 1 crore, it is not clear who will pay the 18 % GST, which come to Rs 18 lakh. Eventually, it is the contractors who will be in deep trouble because the Goods and Services Tax Network (enforcement wing) would pin them down if GST is not paid and the returns are not filed,” said Sharad Aggarwal, a PWD contractor.He added that the GST effect on big ticket projects would be “disturbing if the prices are not reworked to accommodate the hike in the input cost and the GST liability of contractors.” “The raw material for construction has been priced 15 % more than what used to be earlier. The contractor can handle a 15 % hike in the input cost but it will be extremely tough to absorb the 18% GST for a project,” Aggarwal said.Echoing similar sentiments, Ashu Goel, another city-based contractor, said, “Ideally, the cost of all the tenders awarded before GST should be evaluated again to fix the GST component which the agencies have to give to the contractors.”He added that the state government agencies have halted the tender-clearing process that was opened in June this year. “This means the lowest price of each work would be reworked on the basis of the new estimates and it will have to be done for all the contracts,” Goel said.Meanwhile, PWD officials told TOI that they were aware of the situation and will be taking steps to address it soon. “Currently, there is no provision to incorporate GST in tender work that has been awarded prior to the implementation of the tax. However, we are checking to see how we can resolve the issue,” said a senior official of the department.

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