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Clarification on GST on works contract services and funeral services

The clarification has come after a tweet has gone viral claiming "You cannot die without paying 18% GST for crematorium."

Rumour:

There is 18% GST on funeral or crematorium services.

Fact:

The fact is there is no GST on funeral or crematorium services. However there is 18% GST on works contract inside crematorium.

Why GST on works contract services increased from 12% to 18%?

GST rate on works contract supplied to government and works contract for construction of roads, bridges, tunnels, railway, metro, effluent treatment plants, and crematorium etc. on which 12% rate applied earlier, has been increased to 18%.

Officials has also clarified the reasoning for doing so... which is given in the second part of the article.

This rumour came after recent change in GST rates, announced by press release issued on June 29 which states that the GST Council approved 18% GST on “works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium etc.”

“

However the fact is funeral or crematorium services are still exempt under GST according to Schedule III of CGST Act. The same is reproduced below for reference. Why GST on Works Contract .......

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Author:

TaxReply

Jul 22, 2022

Comments

Well the GST rate on works contracts supplied to Govt increased from 12% to 18% wef 18-07-2022.
But If a contract was entered into before 18 jul and payment for same is received after 18 Jul, at what rate the tax liability
Shall be calculated 12% or 18% ???
Kindly throw some light on this

By: Waseem Ahmed Mir
Jul 22, 2022

↳

Replied to Waseem Ahmed Mir

Section 14. Change in rate of tax in respect of supply of services.-

The time of supply, where there is a change in the rate of tax in respect of services, shall be determined in the following manner, namely:-

(a) in case the services have been supplied before the change in rate of tax,-

(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or

(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or

(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;

(b) in case the services have been supplied after the change in rate of tax,-

(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or

(ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or

(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:

Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.

By: Arindam Sarkar
Jul 22, 2022

↳

Replied to Arindam Sarkar

Thanks Dada

By: Waseem Ahmed Mir
Jul 22, 2022

I do agree with Mr. Sirkar's reply. But the Act fails to clarify the situation where the contract has been made at the rate of 12% for a particular project and the funds had already been sanctioned in such cases Who will responsible for cost overrun. For example a corporate boby wants to install m/c at its premises and made a contract at 12% rate the cost over run will be huge. Another glorious example of Smart City Mission project of MOHUA.ministry of housing, who will finance this 6%.As per my opinion the finance ministry should come up with clarity in Smart City Mission. CFO of Agartala Smart City limited. asah456@gmail.com 8902683850.

By: Asim Saha
Jul 23, 2022

SIR I WANT TO KNOW ABOUT ITC ELIGIBILITY FOR WORKS CONTRACT SERVICE FOR IMMOVABLE PROPERTY BY A SUBCONTRACTOR WHO PURCHASES GOOD AND SERVICES FOR WORKSCONTRACT SERVICE.
PLS REPLY WITH REF. RELATED PROVISIONS AND CASE LAW

By: Suresh Agarwalla
Sep 29, 2024