GST and TDS on Labour for a Contractor in construction of Roads

If the labour supplying agency is not registered under GST, then, the labour contract is required to pay Goods and Service Tax on the same under the reverse charge mechanism.

If the labour supplying agency is registered under GST, then, the agency would be charging GST for the labour supply and the labour contractor will get the input tax credit of the same. (GST % will be 18%)

Tds will be deducted as per the provisions of section 194C.[for individual and HUF 1%, for others 2%]

Hello, by labour contractor you mean guy who gave labour to road constructor? 

I am confused what is labour supplying agency?

Who is labour supplying agency and labour contractor in your answer, i read the same answer you put somewhere and was confused by it. Please suggest that what the person taking labour from labour contractor is supposed to do. i hope i am clear. Thanks

 

mam, labour supplying agency is a person/company who is supplying labourers to that road contractor, any way that road contactor hiring huge number of labours to construct a road from labour supplier only.

so, that labour supplier agency is unregistered dealer, but the road contractor is registered dealer means, the bill which is raised by labour supplier agency to road contractor for the supply of labour, will be paid under RCM by that road contractor.

in case that labour supplier agency is registerd dealer under gst means he have to raise GST invoice at 18% toward that road contractor.

regards to TDS, road contractor will deduct Tds from the payment which is supposed to give to that labour supplier agency at 1 or 2% as per provision under section 194C

if it is not clear means, please tell,  from were that road contractor hiring labours. from any labour supplying agency or....

If the labourere are not hired from any man power agency or labour supplying agecy means, relation between road contractor and labours will become employer employee relationship in that situation no GST will be applicable on the labourers payment.

 

 

When labour contractor is Registered:
Is liable to charge & collect GST @ 18% from Receptient

When Labour Contractor is Unregistered:
Cannot charge & collect GST(As per Section 32 CGST Act) & Receptient for the same is not liable do RCM (As RCM on Inward supply from URD is deferred).

Note : RCM on Inward supply fro URD is applicable only on Promotor or Developer , subject to conditions prescribed in Notification 7/2019 CT (R)