Table of Contents
1. Will construction services attract GST?
- Notified pure labour contracts will not be liable to GST.
2. Pure labour contracts vs works contract
- Pure labour contract are the contracts wherein the supplier of service should not utilize any material while supplying the service. It should purely be a labour contract only.
- A labour contract consisting of both labour and material is termed as a works contract.
3. Are works contract services exempted from GST?
- No, works contract services are taxable, since they are not expressly exempted by any notification.
4. What are all the pure labour contracts that are exempted from GST?
- Pure labour contracts relating to the construction, erection or installation of original works pertaining to a single residential unit (Refer FAQ no 3)
- Pure labour contracts supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure under the Housing for all urban mission or Pradhan Mantri Awas Yojana (PMAY).
5. Scope of pure labour contracts relating to a single residential unit
- Services by way of pure labour contracts of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than part of a residential complex are exempted from GST.
6. What about pure labour contracts rendered by service providers in an apartment? Are they exempt from GST?
- A single residential unit means a self-contained residential unit which is designed for use wholly or principally for residential purposes of one family.
- A residential apartment can be assumed to covered within the scope of the term “single residential unit”.
- However, the exemption as mentioned in FAQ no 3 expressly excludes residential units, forming part of a residential complex. Therefore, pure labour contracts rendered in an apartment will not be eligible for exemption.
7. “Original works” for the purpose of GST
- Original Works means
- All new constructions.
- All types of additional and alterations to abandoned or damaged structures on land that are required to make them workable
- Erection, commissioning or installation of plant, machinery or equipment or structures whether pre-fabricated or otherwise.
8. Will construction of structures for use by pubic under a government contract attract GST?
- Yes, services relating to construction of structures for use by public under a government contract are taxable since the same are not expressly exempted under GST law.
9. If any infrastructure is constructed to provide electricity to the tube well of a farmer, will such services attract GST?
- No, services supplied by electricity distribution utilities for the construction, erection or installation of any infrastructure for the purpose of extending electricity upto a tube well of farmer or an agriculturist for agricultural use will not attract any tax.
10. Rate of GST for basic construction services (CGST/SGCT/IGST)
- Construction of affordable residential apartments (including in a real estate project) which commences on or after 1st April, 2019 – 0.75/0.75/1.5
- Construction of residential apartments other than affordable residential apartments (including in a real estate project) which commences on or after 1st April, 2019 – 3.75/.375/7.5
- Construction of commercial apartments (shops, offices, godowns etc.) which commences on or after 1st April, 2019 – 3.75/.375/7.5
- Other construction services – 9/9/18