IMPACT OF GST ON VARIOUS CONSTRUCTION PROJECTS

Abstract

Introduction of Goods & Service Tax has made large scale changes in the working pattern of all the sectors of Indian Economy. The Construction Sector, often known as an “unorganized sector” has been hit by it the most as in construction sector, there are large number of activities involved, a big budget is put up initially, knowledge regarding the document management as well as the management of financial aspects is not done as per the required terms. Often there are shortcuts taken to deal with the tax enhancing activities, which is making the construction industry prone to the bad effects of GST on its working and is regularizing the unorganized sector. There are myths that construction sector is facing a slow down due to GST, there is a rise in the cost of materials, machinery as well as man power due to GST, but the actual scenario is being studied by taking an existing building if construction as per the old system of taxation and if the same is constructed as per the GST regime. The difference in the cost is calculated on unit basis to check the effects of GST on Construction Sector. . Goods and Service Tax GST is all set to be a game changer for the Indian economy. The tax is expected to reduce the concept of ‘tax on tax’, increase the gross domestic product of the economy and reduce prices. In India, there are different indirect taxes applied on goods and services by central and state government. GST is intended to include all these taxes into one tax with seamless ITC and charged on both goods and services. For the introduction of GST, the Government needs to get the Constitution Amendment Bill passed so that the proposed objective of subsuming all taxes and allowing states to tax subjects in Union list and vice versa is achieved. Without these powers, it is not legally possible to move towards GST. Conceptually GST is expected to have numerous benefits like reduction in compliances in the long run since multiple taxes will be replaced with one tax. It is expected to bring down prices and hence the inflation since it will remove the impact of tax on tax and enable seamless credit. It is expected to generate revenue for the country as the tax base will increase as the GST rate will be somewhere around 27% with both goods and services covered. It is also expected to make exports from India competitive and India a preferred destination for foreign investment since GST is a globally accepted tax. Unless the issues relating to GST has been overcome, the GST would become a bare wall without any scripts to describe in future.