Govt depts told to rework estimates based on 18% GST

Panaji, Dec 5, 2022

After the withdrawal of the concessional rate of 12% GST for government contracts, the finance department has asked all government departments to rework the cost of infrastructure projects by calculating GST at 18%.
In a circular to all state departments and agencies, the finance department said that payments for already tendered and ongoing works will have to be recalculated, but fresh sanction is not required for expenditure.

“The payments for ongoing works for which tenders had been called, excluding GST and payment of such works, is made by calculating 12% GST. Now, the payment of such contracts should be passed as per the revised 18% GST,” undersecretary (finance) Pranab Bhat said in the circular.

Meanwhile, the departments have already started preparing fresh estimates for construction projects.

The Central Board of Indirect Taxes and Customs (CBIC) withdrew the 12% GST rate for government contracts in January this year, but in Goa, the applicable rate of GST was enhanced to 18% on July 18.
GST enforcement officers have also identified instances where contractors avoid paying GST by either not filing returns or by undervaluing the contract value. The finance department has asked all government departments to ensure strict compliance of GST norms.

“While making the payments of works for which tenders have been invited, necessary action should be taken as per the terms and conditions and after taking into account the changed 18% GST. For all ongoing contracts, due to 18% GST implications, revised expenditure sanction will not be required for such cases and this condition will be applicable only for additional GST component of 6% and the concerned heads of department will ensure compliance,” Bhat said in the circular.

[The Times of India]