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Expressing concern over the new indirect tax regime and difficulties faced by the builders’ community, the Builders Association of India on Friday requested the Government to exempt existing projects, that have been sanctioned before June 30, from GST.
The request comes a day before the crucial GST Council meeting scheduled to be held here on Saturday.
The apex representative body of civil engineering and construction companies felt that unless the tax issue gets addressed immediately, the negative impact of GST will result in a number of contractors heading for severe financial problems. At a meeting chaired by SN Reddy, National Vice-President, Builders Association of India, here, the members demanded that the Government exempt all existing projects, finalised before June 30, from GST and insisted that the old tax structure of VAT be followed.
The members also demanded that the project costs be revised for the balance work without adding any additional financial burden to the contractors.
S N Reddy said: “We are facing a lot of difficulties with the existing projects. All the members who are executing Government projects are facing problems following the implementation of GST, and resolve to follow the existing procedure in tax structure.”
“These projects have been sanctioned at the pre-GST, VAT rates and most of them come under service tax exempt category. The hasty implementation of Goods and Services Tax has made all these existing projects unviable,” he said.
“Moreover, the GST regime warrants us to pay the applicable GST upfront and claim input tax credit.” This is further increasing the cost burden on the projects. The sector relies heavily on the unorganised sector to source the raw material, it was pointed out.
B Sugunakar Rao, BAI State Chairman, Telangana, said, “The construction industry is the second largest employment generator in the country, next to agriculture. In Telangana more than ₹1-lakh crore worth of projects are in progress as on June 30. For most of the infrastructure projects that are currently under implementation, the proposed GST rates could raise costs and there is limited scope for contract renegotiation.”
“This will have an adverse effect on the viability of these projects. We want the Central and State Governments to consider our demand and address the concerns of builders,” he said.
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