Composite supply of works contract supplied to Government authority or Government entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of any historical monument, archaeological treatment or disposal will be taxable @ 18% from 1st January 2022. The treatment will be the same in case the services are provided by a sub-contractor to the main contractor who is providing such construction services to the Government entity. Prior to this change, such services to both local and Government authority were taxable @12%.
Composite supply of works contract involving predominantly earthwork (that is, constituting more than 75% of the value of the works contract) provided to the Governmental Authority or a Government Entity will be taxable @18% from 1st January 2022 onwards, provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.
The term “Earth Work” has not been defined under any GST provisions. Earthwork is basically engineering works through the processing of parts of the earth’s surface involving quantities of soil or unformed rocks. The work order should be specifically for supply of services with material and when the major part of the contract involves earthwork i.e., more than 75%, providing to a Government authority or a Government Entity which is currently taxable at the rate of 5%. The treatment will be the same in case the services are provided by a sub-contractor to the main contractor who is providing such construction services to the government entity.