Gst rate to sub contractor - exempted service

22 May 2019
Sir / Madam,

My query is relating to GST rate to Sub contractor where the GST rate is "Nil / Exempted" to Main Contractor.

The Main contractor is providing service to Local Authority (Municipality), which is exempted under GST.

The Main contractor is asking sub contractor to invoice without GST, stating it is exempted service (to govt). Further main contractors finance staff is explaining that, the rate to sub contractor will be same as rate to Main contractor.

Requesting kind opinion.

CA Anita Bhadra (Expert)
22 May 2019
There was Press Release by Government of India on 18 Jan 2018 :indicating Recommendations made on GST Rate changes on services by the 25th GST Council Meeting :-

As per this release -GST Rate for sub contractor shall be the same which is applicable for main contract

To reduce GST rate (from 18% to 12%) on the Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity, which attract GST of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also be liable @ 5%.

Omprakash (Querist)
28 May 2019
Anita Ji, thanks a lot for the opinion, very helpful.

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