GOVERNMENT OF TELANGANA

ABSTRACT

I & CAD Department – Implementation of Goods and Services Tax (GST) for
ongoing and future works contracts w.e.f 01-07-2017 – Guidelines on
implementation of Goods and Services Tax (GST) for regulating work bills forall
Engineering Departments- Orders –Issued.
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IRRIGATION AND CAD (REFORMS) DEPARTMENT

G.O.Ms.No. 67 Dated: 04-07-2018

Read the following:

1. From the Engineer-in-Chief (I), I&CAD Department, Hyderabad,

Lr.No.ENC(I)/DCEI/OT2/AEE20/GST/2017, Dt:10-07-2017.
2. Government Memo No.6774/Reforms/2017, Dt:11-07-2017.
3. From the Deputy Commissioner, Commercial Tax Department
Hyderabad letter Dt: 24-07-2017.
4. From the Engineer-in-Chief(I),I&CAD
DepartmentHyderabad,Lr.No.ENC/IW/P&M/EE/DEE.2/AEE.4/GST/Vol-
I/17,Dt:11-01-2018 and 17-03-2018.
***
O R D E R:

The new Tax regime in the form of the Goods and Services Tax (GST)
came into effect from 1st of July 2017 with Central Goods & Services Tax (CGST)
Act No. 12 of 2017 and the Telangana Goods & Services Tax (TGST) Act No. 23
of 2017. Section 2 (119) & para 6(a) of schedule-II of CGST Act stipulates that
all the work contracts shall be treated as supply of services. This provision
makes a substantial difference in view of the fact that the works contracts with
SOR prior to 2017-18, were inclusive of Central & State Taxes. Now, in the GST
regime there shall not be any tax imposed on tax. Thus, there is a need for
uniform guidelines for implementation of GST, categorising the works into those
estimated with SOR up to & including 2016-17 and those with SOR of 2017-18.
The implementation of GST in all the Engineering Departments involves major
process and procedural changes. Based on the request of the Engineer-in-
Chief(Irrigation) in the reference 1st read above,Government of Telangana
constituted a Committee for implementation of GST in all Engineering
Departments vide reference 2nd read above.

2.In the reference 3rd read above, the Deputy Commissioner, Commercial Tax
Department has submitted the Committee Report on the effect of Goods and
Services Tax (GST).

3.In the reference 4th read above, the Engineer-in-Chief (I) has submitted the
recommendations of the Board of Chief Engineers on implementation of GST
with draft guidelines on implementation mechanism for various Works Contracts
and requested to issue guidelines.
(P.T.O)
 // 2 //

4.Government after careful consideration of the reports of BOCEs and the

committee constituted by the Governmenthereby issue the following guidelines
on implementation mechanism of GST for various Works Contracts in all
Engineering Departments:

5(a)As per the GST Act all works contracts are to be levied GST with effect from
1/07/2017 i.e., including subsisting contracts as on that date at the rates
mentioned below:
i. From 01-07-2017 to 21-08-2017 for all work contracts GST at 18%
ii. From 22-08-2017 to 12-10-2017 for all work contracts GST at 12%
iii. From 13-10-2017 onwards
a. For works having earth work component of 75% and
more in terms of cost of the concerned works
estimates GST is to be levied at 5% on the bills value.
b. For all the other works contracts of all Departments
and sectors GST is to be levied at 12% on the bills
value.

(b) All the Works Contracts are to be considered under two categories
for implementation of GST w.e.f 01-07-2017.
i. SOR for year 2017-18 onwards:
Contracts for which estimates are prepared with SOR 2017-18(in
which rates are excluding taxes).
Since the SOR 2017-18 was already approved by BOCE without
taxes, necessary provisions may be made in part-B of the
estimates as follows:
 GST @ 18% for the period from 01-07-2017 to 21-08-2017 and
@ 12% from 22-08-2017onwards.
 Those works contracts involving more than 75% earth work
attract 5% GST w.e.f. 13-10-2017.
ii. SOR prior to 2017-18 :
Ongoing contracts for which estimates were prepared with SOR
prior to 2017-18 (in which taxes are included):
The estimates which were prepared with earlier SORs (prior to
SOR 2017-18) are to be split into two i.e. value of work done and
paid in VAT regime (i.e as per the respective Agreements) and
value of work done on or after 01-07-2017 for which GST
applicable.
(c)Under GST regime, there is a facility of taking credit for all the GST
already paid by the Agencies on all the inputs i.e., various
materials like Cement, Steel, Pipes etc., during the course of works
execution. These taxes paid by the works agencies are to be
accounted as paid against the GST payable @ 18% or 12% or 5%
on the bills and the balance tax is to be paid by the agencies
towards GST on the work bills payments received by them.
 (Contd..P-3)

// 3 //

(d) Since, GST is a new tax not stipulated in the subsisting

agreements of the ongoing works as on 01.07.2017 or after
without the stipulation, the same has to be reimbursed to the
agencies after considering the actual net amounts paid / payable
by them during the works execution towards GST.

The net GST payable to the Contractors for ongoing works as on

01.07.2017 and also for the works taken up after 01.07.2017
with rates inclusive of taxes shall be @ 5% or 12% or 18%
whichever applicable on amount of work bill after deducting
embedded taxes.

(e) The difference of taxes paid and GST leviable for every running
bill is to be reimbursed to agencies. For this purpose, the taxes
embedded in the estimates are to be worked out by the estimate
sanctioning authorities and communicated to the agreement
authorities. After due approval of Agreement authorities, the
difference has to be adjusted.
(f) For new Works contracts which are based on estimates with SSR
of 2017-18 excluding tax component, the GST payable shall be
indicated in Part-B of agreement at the rate of 18% or 12% or
5% as the case may be and accordingly paid for every running bill
to the agencies. This provision is to be made in the sanctioned
estimates separately.
(g) The concerned agencies of works contracts are responsible to
discharge their liability as per GST Act and provisions and to file
their returns accordingly.

6. The Board of Chief Engineers (BOCEs) shall quantify the embedded taxes in
various types/components of works, within a fortnight of issue of this order, so
as to have uniformity across the state. The BOCEs shall also ensure that a
mechanism is set up for monitoring the GST paid by each agency.Suitable
clause/condition may be framed for incorporation into future bid
documents/Agreements of all Departments.

7. The 5% additional amount paid towards GST for the intervening period
based on the instructions issued by the Government vide Memo.No.33/WP/A2/
2017, Dt: 08-08-2017 has to be taken in to account while adjusting the GST
payable.

8. The Finance (W.P) Department shall issue instructions to the D.D.Os on the
following:

i. Provide the agency wise (along with GSTIN number) GST

paid and work value to the CT Department by web service as
well as through soft copy.
 ii. Take an undertaking from the agency before releasing the
amounts that the Agency has filed GST returns up to
previous month.
(P.T.O)
// 4 //

9.The Engineer-in-Chief (Irrigation), Hyderabad shall take further necessary

action accordingly.

10. This order issues with the concurrence of Finance (W.P) Department
videtheirU.O.No.2868/42/WP/A2/2018, Dt: 04-07-2018.

(BY ORDER AND IN THE NAME OF THE GOVERNOR OF TELANGANA)

Dr. SHAILENDRA KUMAR JOSHI

SPECIAL CHIEF SECRETARY TO GOVERNMENT (FAC)
To
The Engineer-in-Chief(Irrigation), I&CAD Department, Jalasoudha Buildings,
Errummanzil, Hyderabad.
The Engineer-in-Chief (I.W), I&CAD Department, Jalasoudha Buildings,
Errummanzil, Hyderabad.
Copy to:-
All Engineer-In-Chiefs and the Chief Engineers, I & CAD Department.
The Accountant General/Principal Accountant General, Telangana, Hyderabad.
The Director Works & Accounts, Telangana, Hyderabad.
The Commissioner, Commissionerate of Tenders, Hyderabad.
The Engineer-in-Chief (TR&RB)Department, Hyderabad.
The Engineer-in-Chief, PR&RD Department, Hyderabad.
The Engineer-in-Chief, MA&UD Department, Hyderabad.
The Engineer-in-Chief, PH Department, Hyderabad.
The Finance (W.P) Department.
The Revenue (C.T) Department.
The Special Chief Secretary (FAC) to I& CAD Department.
The Principal Secretary, TR&RB Department.
The Principal Secretary, PR&RD Department.
The Principal Secretary, MA&UD Department.
The P.S. to Principal Secretary,Hon’ble Chief Minister
The P.S to Hon’ble Minister, Irrigation.
The P.S. to Hon’ble Minister, TR&B Department.
The P.S. to Hon’ble Minister, PR&RD Department.
The P.S. to Hon’ble Minister, MA&UD Department.
The Dy. Director Monitoring Wing, I&CAD Department.
All work Sections in this Department.
SF/SC (C.No.6774/Reforms/2017).

//FORWARDED::BY ORDER//

SECTION OFFICER