Nagpur: Private contractors catering to state government departments are demanding refund of additional amount charged under GST, for the works taken up before the new the tax came into force. Over 2,000 contractors working for public works and irrigation departments are expected to hold protests near RBI on Friday.

Even contractors attached to Military Engineering Services’ (MES), have raised a similar demand, independently. Civil engineering works in defence areas are carried out by the MES. After a meeting planned with officials next week, the MES contractors are planning to stop responding to fresh tenders. Meanwhile state government contractors have already adopted such a stance.

“Contractors in many parts of the state have already, stopped responding to tenders issued by state government departments in post GST period. Protests in lines of one planned in Nagpur have been held elsewhere too,” said Pravin Mahajan, the president of Contractors and Builders Association of Vidarbha.

Mahajan told TOI that earlier VAT of 5% was applicable on the contracts. Now under GST, the tax has straightaway jumped to 18%. The demand is that state government should refund the additional amount charged to the contractors.

Under GST, the levy is equally divided between the state and centre. It is being demanded that the state government should refund even the centre’s share as far as the additional tax is concerned. The issue has been taken up with state’s finance ministry but no decision has been taken yet, he said.

“The MES contractors may also plan to boycott tenders in the coming days. A meeting has been planned on September 13 or 14 over the issue. If the officials do not agree, the contractors may stop responding to tenders,” said Balbir Singh Vij, the president of MES Contractors’ Association.

The association has already secured letters from the union ministry of finance that the additional levy in the form of GST is not applicable for earlier works. However, top brass of MES which comes under the ministry of defence are not agreeing. Their stand is that the amount can be refunded only if the ministry of defence issues a letter, said Vij.

Till 2015 there was no service tax on government contracts. After 2016 it was 6% and 11% depending upon the type of work. As GST is charged at 18%, even after 2016 the additional amount needs to be refunded. The tenders have a clause that any subsequent tax will have to be refunded, said Vij.



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