Ag e nda 2 Wo rks c o ntra c t V/ S c o nstruc tio n c o ntra c ts - PDF document

CA Rajat B Talati 16 ‐ 01 ‐ 2019 GST Issue s in Works Contra c t tra nsa c tion with re le va nt Adva nc e Rulling s PRE SE NT AT I ON BY: CA RAJAT B T AL AT I T AL AT I & CO., CHART E RE D ACCOUNT ANT S MUMBAI ra ja t@ ta la tic o .c o m DT . 17.1.2019 ORGANI SE D BY T HE GOODS & SE RVI CE S T AX PRACT I T I ONE RS’ ASSOCI AT I ON OF MAHARASHT RA Ag e nda 2  Wo rks c o ntra c t V/ S c o nstruc tio n c o ntra c ts  Na ture o f supply in c a se o f c o nstruc tio n o f c o mple xe s  T ra nsitio na l pro visio ns  Cla ssific a tio n – ra te o f ta x – No tifie d pro je c ts  I ssue s in  re de ve lo pme nt pro je c ts  JDA  Anti-pro fite e ring  Re le va nt Adva nc e Rulling 1

CA Rajat B Talati 16 ‐ 01 ‐ 2019 I ntro duc tio n o f VAT & SE RVI CE T AX o n 3 Co ntra c to r a nd Builde rs  Se c .65(54) of Se r vic e T a x Ac t  Se c .2(24) of MVAT Ac t de fine s sa le s, de fine s works c ontra c t a s: a nd E xpla na tion 1(ii) inc lude s the following : “wo rks c o ntra c t” me a ns a c ontra c t whe re in tra nsfe r of prope rty in g oods the tra nsfe r of prope rty in g oods (whe the r involve d in the e xe c ution of suc h a s g o o ds o r in so me o the r fo rm) invo lve d c ontra c t is le via ble to ta x a s sa le of in the e xe c utio n o f a 13[14[wo rks c o ntra c t g oods a nd suc h c o ntra c t is fo r the inc luding ], a n a g re e me nt fo r c a rrying o ut purpo se o f c a rrying o ut c o nstruc tio n, fo r c a sh, de fe rre d pa yme nt o r o the r e re c tio n, c o mmissio ning , insta lla tio n, va lua b le c o nside ra tio n, the b uilding , c o mple tio n, fitting o ut, re pa ir, c o nstruc tio n, ma nufa c ture , pro c e ssing , ma inte na nc e , re no va tio n, a lte ra tio n fa b ric a tio n, e re c tio n, insta lla tio n, fitting of a ny mova ble or immova ble o ut, impro ve me nt, mo dific a tio n, re pa ir o r prope rty o r fo r c a rrying o ut a ny o the r c o mmissio ning of a ny mova ble or simila r a c tivity o r a pa rt the re o f in immova ble prope rty ;] re la tio n to suc h pro pe rty; 4 T AX ABI L I T Y PRE AND POST GST CA Rajat B Talati Pa rtic ula rs VAT GST T a x lia b ility 1% o n Ag re e me nt T ime o f Supply o f va lue o n da te o f se rvic e re g istra tio n I T C No I T C E lig ib le fo r I T C Co mpo sitio n Ye s No OMS Purc ha se d o n F ull c a n ta ke c re dit o f I GST Purc ha se ra te o f T a x, no I T C a va ila b le 2

CA Rajat B Talati 16 ‐ 01 ‐ 2019 Supply- Ba sic s 5 Supply of Goods a nd/ CA Rajat B Talati or Se rvic e s Import of Conside ra tio se rvic e for n c onside ra tion Supply Without Ma de or Conside ra tio a g re e d to be n ma de (Sc h I) In c ourse or furthe ra nc e of busine ss Supply Inc lude s … 6 CA Rajat B Talati Supply Sa le T ra nsfe r Ba rte r E xc ha ng e L ic e nc e Re nta l L e a se 3

CA Rajat B Talati 16 ‐ 01 ‐ 2019 SUPPL Y UNDE R GST 7 Co mpo site Co ntra c ts o f Ma te ria l a nd L a b o ur I n re la tio n to I n re la tio n to Mo va b le I mmo va b le Pro pe rty Pro pe rty Wo rks Co ntra c t [se c tio n Co mpo site Mixe d supply 2(119)] supply [se c tio n [Se c tio n 2(74)] Sc he dule I I e ntry 5(a ) 2(30)] CA Rajat B Talati Supply of Se rvic e s WORKS CONT ACT SE RVICE S [SE C 2 (119)] 8 • Wo rks c o ntra c t me a ns a c o ntra c t. wc • Whe re in tra nsfe r o f pro pe rty in g o o ds is invo lve d. • I n the e xe c utio n o f suc h c o ntra c t. wc • a nd inc lude s c ontra c t for building , c onstruc tion, fa bric a tion, c omple tion, e re c tion, insta lla tion, fitting out, improve me nt, modific a tion, re pa ir, ma inte na nc e , re nova tion,a lte ra tion or wc c ommissioning of a ny immova ble prope rty . • of a ny immova ble prope rty 4

CA Rajat B Talati 16 ‐ 01 ‐ 2019 CONT ARCT F OR SUPPL Y & I NST AL L AT I ON OF E L E CT RI CAL E QUI PME NT . 9 • Co mpo site supply. • Mixe d supply. ? • Wo rks c o ntra c t se rvic e s. • It is impo rta nt to de c ide . • It will impa c t o n GST Ra te to b e le vie d. why • IT C to b e c la ime d. • Ca re ful e xa mina tio n o f c o ntra c t. • Ide ntify c o mpo ne nts to suppo rt the de c isio n. • Do c ume nta tio n Ac tio n Co mpo site Supply 10  I t is a tra nsa c tio n whe re two o r mo re supplie s a re invo lve d.  Suc h supplie s a re na tura lly b undle d a nd supplie d in c o mb ina tio n  in the o rdina ry c o urse o f b usine ss.  GST le vie d on princ ipa l supply. Supply o f g o o ds (Princ ipa l Supply) Co mpo site Na tura lly + Supply b undle d T ra nsit insura nc e 5

CA Rajat B Talati 16 ‐ 01 ‐ 2019 11 Mixe d Supply  I t is a tra nsa c tio n whic h c o mprise s o f two o r mo re supplie s fo r a sing le pric e .  Bo th the supplie s a re inde pe nde nt & e q ua lly impo rta nt  GST le vie d o n princ ipa l supply.  Supply a ttra c ting hig he st ra te of ta x will be c onside re d a s supply fo r GST Mo vie tic ke ts + F o r a sing le Mixe d Supply pric e F o o d Co mb o Co ntinuo us Supply o f Se rvic e s de finitio n 12 Se c .2(33) o f the CGST Ac t, 2017 CA Rajat B Talati  supply o f ser vices whic h is  pro vide d, o r agre e d to be pro vide d, c o ntinuo usly o r o n re c urre nt basis, unde r a contr act , fo r a  per iod exceeding thr ee months with pe rio dic payme nt o bligatio ns and inc lude s supply o f suc h se rvic e s as the Go ve rnme nt may, subje c t to suc h c o nditio ns, as it may, by no tific atio n, spe c ify 6

CA Rajat B Talati 16 ‐ 01 ‐ 2019 Wo rks Co ntra c t de finitio n 13 Se c .2(119) o f the CGST Ac t, 2017  Me ans a c o ntrac t fo r building , c o nstruc tio n, fabric atio n, c o mple tio n, e re c tio n, installatio n, fitting o ut, impro ve me nt, mo dific atio n, re pair, mainte nanc e , re no vatio n, alte ratio n o r c o mmissio ning o f  any immovable pr oper ty  whe re in transfe r o f pro pe rty in go o ds (whe the r as go o ds o r in so me o the r fo rm) is invo lve d in the e xe c utio n o f suc h c o ntrac t; CA Rajat B Talati Wo rks c o ntra c t V. Co mpo site Co ntra c t 14  PE W E ng g . (P) L td dt. 21.12.2018 – We st Ba ng a lo re  Re tro fitting o f a ir b re a k syste m o n wa g o n is a c o mpo site supply  Air b re a k syste m a re no t ‘ immo va b le pro pe rty’ it is no t wo rks c o ntra c t  E ife e l Hills & Da le s De ve lo pe rs (P) L td – AAR-MAH dt. 14.12.18  Plumb ing c o ntra c t  Ac tivitie s c a nno t b e divide d into two pa rts – supply o f g o o ds a nd se rvic e s; whic h a re infa c t inse pa ra b le .  I t is wo rks c o ntra c t  E le c tric a l c o ntra c t is a lso c o mpo site c o ntra c t & is wo rks c o ntra c t 7

CA Rajat B Talati 16 ‐ 01 ‐ 2019 Wo rks c o ntra c t V. F ina nc ia l Mo de l 15  Supe r We a lth F ina nc ia l E nte rprise (P) L td AAR dt/ 6.8.2018 AAR-Orissa  E ne rg y pe rfo rma nc e c o ntra c t e nte re d into with munic ipa l c o rpo ra tio n fo r stre e t lig hting . Ope ra tio ns & ma inte na nc e fe e s c o lle c te d  Is it e xe mpt ? I n te rms o f no tific a tio ns 12/ 2017 – C. T .(Ra te ) dt.28.6.17 (b e ing func tio n o f lo c a l a utho rity unde r Artile 243w o f c o nstitutio n o f I ndia ?  Co ntra c t invo lve s  Re pla c e me nt o f lig ht b ulb s with e ne rg y e ffic ie nt L E D lig hts  Ma inta ining the sa me lig hting fixture s & re pla c ing the m whe re ve r L E D la mps fa ils  Sub missio n o f mo nthly e ne rg y sa ving re po rt, O&M fe e s c o lle c te d  T o b e ha nde d o ve r to the munic ipa l c o rpo ra tio n a t the e nd o f pro je c t pe rio d i.e . 4 ye a rs  Se tting mo nito ring syste m Wo rks c o ntra c t V. F ina nc ia l Mo de l 16 (c o nt..) He ld  No t a ‘ pure la b o ur’ c o ntra c t a s ‘ invo lving supply o f a ny g o o ds’  Se c tio n 2(119) – te rms use d a s ‘ re pla c e me nt, fitting o ut, re pa ir & mo nito ring ’ – use d in the c o ntra c t is indisputa b ly ‘ wo rks c o ntra c t’ . 8