GST evasion in construction, works contracts exceeds ₹10,000 crore in FY24

By: Admin
May 22, 2024
Categories: GST Recent News
4 Min Read

As the Narendra Modi government plugs Goods and Services Tax (GST) leakage across the country, over ₹10,000 crore of evasion has been claimed on account of works contracts and construction services in the last fiscal, sources have told CNBC-TV18.

The Directorate General of GST Intelligence, which is the central agency that keeps a close watch on evasion, claims that out of the alleged evasion, over ₹ 8,900 crore of dues are yet to be cleared by the taxpayers.

Sources said, “Maximum amount of GST which has been evaded under services category in last fiscal (FY24) was from construction services and works contract via availment of fake Input Tax Credit (ITC), wrong availment of exemption notification / ITC, undervaluation, non-payment of taxes, as prime reasons of evasion by the taxpayers.”

The DGGI has registered 1,813 cases of evasion, with alleged evasion of ₹10,600 crore (approximately) and on cross-examination of taxpayers involved over alleged evasion, taxpayers voluntarily made payments of about ₹1,640 crore (approximately), sources added.

So what are the GST rates on works contracts and construction services?

According to the law and rules, ITC is not available for works contract services when supplied for the construction of immovable property (other than plant & machinery or where it is an input service for further supply of works contract service.)

ITC is also not available where it is received for the construction of immovable property on his account. Government through circular No.177/09/2022 TRU, issued after the 47th meeting of the GST council, at serial 17 clarifies further that the GST rate will be 18% with effect from July 18, 2022, as against 12% earlier.

Source from: https://www.cnbctv18.com/economy/gst-evasion-in-construction-works-contracts-exceeds-%E2%82%B910000-crore-in-fy24-19415366.htm