GST Council in its 21st meeting at Hyderabad had recommended reduction of tax rate from 18% to 12% for
Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or
(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the CGST Act, 2017 (namely, MPs/Members of State Legislatures, Panchayats, Municipalities, other local authorities, persons holding constitutional posts, chairperson/member/director in a body established by Central Government, State Government or local authorities etc.)
The above reduction in rate has now been notified by Notification dated 21-09-2017.
Construction service provided
Ø to above contractees for historical monuments, canal, dam, bridges, other irrigation work, pipeline, conduit or plant for water supply or treatment or serwerage treatment or disposal
Ø for road, bridge, tunnel, or terminal for road transportation for use by general public
Ø Under projects of JNNURM, Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana
Ø Pollution Control or Effluent treatment plant, not located in factory
Ø a structure meant for funeral, burial or cremation of deceased
Ø railways
Ø single residential unit
Ø low-cost houses up to a carpet area of 60 square metres per house
Ø post-harvest storage infrastructure for agricultural produce including a cold storage
Ø mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.
Had already been reduced to 12% by Notification dated 22-08-2017
What is Governmental Authority ?
Governmental Authority has meaning under explanation to section 2(16) of IGST as per Notification 12/2017.
As per section 2(16), Explanation .––For the purposes of this clause, the expression “governmental authority” means an authority or a board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution
Following Function of Municipality are provided under Article 243W of Constitution read with Schedule XII to the Constitution:
- Urban planning including town planning.
- Regulation of land-use and construction of buildings.
- Planning for economic and social development.
- Roads and bridges.
- Water supply for domestic, industrial and commercial purposes.
- Public health, sanitation conservancy and solid waste management.
- Fire services.
- Urban forestry, protection of the environment and promotion of ecological aspects.
- Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.
- Slum improvement and upgradation.
- Urban poverty alleviation.
- Provision of urban amenities and facilities such as parks, gardens, playgrounds.
- Promotion of cultural, educational and aesthetic aspects.
- Burials and burial grounds; cremations, cremation grounds; and electric crematoriums.
- Cattle pounds; prevention of cruelty to animals.
- Vital statistics including registration of births and deaths.
- Public amenities including street lighting, parking lots, bus stops and public conveniences.
- Regulation of slaughter houses and tanneries
Construction service to Institution not performing above functions shall continue to be taxed @ 18%.