CBIC Withdraws 12% GST Rate for Govt Contracts from 1 Jan 2022

· 18% Rate Applicable

The Central Board of Indirect Taxes and Customs (CBIC) has notified the withdrawal of the 12% GST rate for government contracts and the applicable rate of GST will be 18% from January 1, 2022.

In exercise of the powers conferred by sub-section (1), sub-section (3), and sub-section (4) of section 9, sub-section (1) of section 11, sub-section (5) of section 15, sub-section (1) of section 16, and section 148 of the Central Goods and Services Tax Act. 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary for the public interest so to do, on the recommendations of the Council, further amends the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.11/2017- Central Tax (Rate), dated the 28th June 2017.

In the said notification, in the TABLE against serial number 3 in column (3), in the heading “Description of Service”, in items (iii, (vi), (ix) and (x), for the words “Union territory, a local authority, a Governmental Authority or a Government Entity” the words “Union territory or a local authority shall be substituted.

In column (3), in the heading “Description of Service”, in item (vii), for the words “Union territory, local authority, a Governmental Authority or a Government Entity” the words Union territory or a local authority” shall be substituted;

In column (5), in the heading “Condition”, the entries against items ((vi),(vii).fix) and (x) shall be omitted.

(ii) against serial number 26, in column (3), in the heading ‘Description of Service’, in item (i), in clause (b), after the words, numbers, figures and brackets “Customs Tariff Act, 1975 (51 of 1975)” the words “except services by way of dyeing or printing of the said textile and textile products” shall be inserted.