Gst rate

PIJUSH KUMAR CHAKRABORTY (Querist) 13 December 2017 This query is : Resolved
DEAR EXPERT,
IF WORK IS EXECUTED BY XYZ COMPANY FOR GOVERNMENT OR LOCAL AUTHORITY THEN THE TAX RATE WILL BE 12%. IF THE WORK IS BACK TO BACK SUB-CONTRACTED TO ABC COMPANY THEN WHAT WILL BE THE TAX RATE APPLICABLE TO ABC COMPANY.

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Guest (Expert) 13 December 2017
Kindly Post this in CA Club of this same forum

R.Ramachandran (Expert) 14 December 2017
Dear Mr. Piyush,
In the fact situation given by you, in the case of works contract, whether it is executed by a main contractor or sub-contractor, the works contract is executed ultimately only to the Govt./Local Authority. In other words, when the sub-contractor executes a works contract, he directly does it to the Govt/Local Authority. It is not the case that the main contractor first gets a works contract executed on his account and then that the main contractor executes anything in addition. This is exactly what the Supreme Court had held in L&T Projects case.
Therefore, the sub-contractor will charge 12% GST on the amount billed to the main contractor. The main contractor will after adding his margin will raise a bill on the Govt./Local authority again by charging 12% GST.

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