1. GST- Works Contract and overlapping transactions

2. Overview Works Contract Restaurant Right to Use
Overlapping transactions including ISD

3. Works Contract

4. How its taxed currently? Why its taxed this way?
Works contract
What is it?
How its taxed currently?
Why its taxed this way?
In GST, how taxation will be?
Issues
Impact

5. Works contract
Goods
Services
Works contract

6. Timeline
Prior to 1982
After 46th Amendment

7. Why taxed in such way? Deemed sale = Sale - 366 (29A)
A tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
Deemed sale = Sale -

8. How its taxed in current regime?
Works contract
Goods value
VAT
State VAT Act
Service value
Service Tax
Finance Act, 1994

9. Schemes
Actual basis
VAT
Composition ST

10. Issues Goods incidental or services incidental? Dominant intention?
Different definitions in ST and VAT laws
Different treatments (TDS, RCM etc)
Separate rates and composition schemes

11. GST regime - issues Section 8
GST to apply on supply of goods and/or services

12. GST regime - issues Schedule II –
5. The following shall be treated as “supply of service”
(f) Works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract
‘Works contract’ is defined
(110) “works contract” means a contract wherein transfer of property in goods is involved in the execution of such contract and includes contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property

13. No separate provisions for rate, value, ToS, PoS etc
Transaction
Goods
Deemed/ declared
Services
Both
No separate provisions for rate, value, ToS, PoS etc

14. GST regime - issues Repair of car Job work Composite supply
Job work” means undertaking any treatment or process by a person on goods belonging to another registered taxable person
Composite supply
TV with transportation
Whether dominant intention can resurface as rates could be different?

15. Impact Revisit contracts Which tax to pay and how?
Restructuring could be required
Composition scheme
Rates
Effective tax rates may go up/ down
Rule 6 of CCR
Transitional
Transitional provisions to be revisited

16. Restaurants

17. How its taxed currently? Why its taxed this way?
Restaurant
What is it?
How its taxed currently?
Why its taxed this way?
In GST, how taxation will be?
Issues
Impact

18. Restaurant
Goods
Services
Restaurant

19. How its taxed in current regime?
Restaurant
A/c
VAT
Service Tax
Non-a/c

20. State-wise different rates
Issues
State-wise different rates
Home delivery of food
Credits

21. Why taxed in such way? 366 (29A)
A tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service, is for cash, deferred payment or other valuable consideration
Deemed sale = Sale -

22. GST regime It’s a ‘service’
Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration
‘Restaurant’ is not defined
A/c
Non-a/c

23. Impact Rates Effective tax rates may go up/ down Rule 6 of CCR
Transitional
Transitional provisions to be revisited

24. Right to use

25. Right to use What is it? Issues Impact Why its taxed this way?
How its taxed currently?
Why its taxed this way?
In GST, how taxation will be?
Issues
Impact

26. RighT to use
Possession
Control
Right to use

27. How its taxed in current regime?
Right to use
Both, possession and control transferred
VAT
In all other cases
Service Tax

28. Whether possession and control transferred?
Issues
Whether possession and control transferred?
Dominant intention?
ST or VAT?

29. Why taxed in such way?
366 (29A)
A tax on transfer of  right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration
Deemed sale = Sale -

30. GST regime It’s a ‘service’ ‘Right to use’ is not defined
A transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration
‘Right to use’ is not defined
What is right to use?
What if right to use is not transferred?

31. Impact Revisit contracts Restructuring could be required Rates
Effective tax rates may go up/ down
Transitional
Transitional provisions to be revisited

32. Overlapping issues

33. Overlapping issues Software Intangibles (Including franchisee rights)
Real Estate
Input Service Distributor

34. Thank you … For any Clarification, Please Contact Indirect Taxes Committee of ICAI ; Website: or
CA Pritam Mahure