WORKS CONTRACT, Goods and Services Tax - GST

[RV PERUMAL]

A PRIVATE LTD COMPANY'S DIRECTOR CONSTRUCTED HIS RESIDENCE HOUSE. THE LAND, PLAN APPROVAL AND EVERY THING IN THE NAME OF HIM. BUT THE CONTRACTOR'S PAYMENT IS MADE BY COMPANY. HENCE, GST DEPARTMENT ASKED TO PAY GST @ 18% INSTEAD OF 12%. WHETHER IS IT CORRECT OR NOT. PLEASE GUIDE

Posts / Replies

[KASTURI SETHI]

In this scenario, a person who makes payment for service is de facto service receiver. Hence the department's stand is correct. There are other factors who is liable to pay tax but here the company is in the forefront.

[RV PERUMAL]

THANK YOU VERY MUCH SIR. HERE, THE PAYMENT MADE BY THE COMPANY ON BEHALF OF THE DIRECTOR AND NOT REFLECTED IN THE COMPANY'S BOOK AS A BUILDING OR SOME OTHERS. THE COMPANY ACCOUNTED THE PAYMENT AS A LOAN TO DIRECTOR OR DIRECTOR'S CURRENT ACCOUNT. NOW, WHAT'S THE TAX RATE

[KASTURI SETHI]

Sh.R.V. Perumal Ji,

With reference to your above query at serial no.2 dated 22.3.21, you have not disclosed full facts at the first instance. The following facts are in favour of the company :-

(i) Payment made for and on behalf of Director

(ii) Not accounting for the payments in the company's account as receivrer of construction service.

(iii) Loan

Suppose A intends to make payment on behalf of B , B can do so. There is no such restriction in CGST Act. Liability rests with B.

Regarding rate of tax in this scenario, pl. go through serial no.11 of Notification No.12/17-CT(R) dated 28.6.17 as amended up to 16.10.20

 

[ABHISHEK TRIPATHI]

As KS Sir stated - Notification

S No. 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. - Nil- Nil