I am working in a firm which provides sub-contract work on behalf of a company to Govt. Are we eligible to Take the ITC on the material used in the project and on the other expenses/purchases..?
also, clarify me when the subcontractor is supposed to issue the invoice to the main contractor.
20 September 2019
If you are registered dealer under GST and charging GST in your invoice, you are eligible to take GST credit for inputs as long as it is relating to furtherance of business and will not come under section 17 ( 5) of CGST act ( says where ITC is not allowed)
The sub contractor can issue invoice to contractor. We also wish to know the nature of project carried out by you to your contract company and that company to Government. That is also important for giving reply to your query.
20 September 2019
Sir, Nature of the project is "Construction of Major sullage Drain." it was granted to one company and that company has given subcontract to do the same. Which means there is nothing to do by the main contractor. After leaving Query here in the morning, I tried to find the GST rate to be charged by us at the time of issue of Invoice which was giving below;
GST Rate 18% (SINCE WE ARE CHARGING THE COMPANY NOT THE GOVT).
20 September 2019
In the agreement , there will be clauses like 1. amount payable to you 2. Date of completion 3. billing cycle 4. payment terms . Based on the above , the invoice is to be raised to contractor.
Taking GST credit on purchase is separate subject and you have to account basic amount in purchase and to account GST credit in the ledger CGST GST - ITC, SGST GST - ITC IGST GST ITC as the cas may be and this ITC should be adjusted in CGST - GST - OUTPUT TAX , SGST - GST - OUTPUT TAX and IGST - GST OUTPUT TAX as the case may be after raising of GST invoice and at the time of making net GST payment ( Output tax less GST ITC) . Till that time GST ITC is to be under current assets.
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