Cheat Sheet: Work contract in GST and GST Council

1. Work Contract under GST

1.1 Definition and Scope

1.2 Constitutional and Legal Framework

1.3 Classification and Tax Treatment

1.4 GST Rates on Works Contract

1.5 Input Tax Credit (ITC)

• ITC available on inputs and input services used in execution of works contract
• ITC on capital goods subject to Section 16 and Section 17 restrictions
• ITC not available when composition scheme opted under Notification 11/2017 for real estate sector
• Reversal of ITC required under Section 17(5) for blocked credits
• Section 17(5)(c) and (d) - ITC blocked on works contract services for construction of immovable property (except plant and machinery)

1.6 Valuation of Works Contract

1.7 Place of Supply Rules

1.8 Time of Supply

• Date of issue of invoice or last date on which invoice should be issued - whichever is earlier
• Invoice to be issued within 30 days from date of supply of service
• Date of receipt of payment - if payment received before invoice
• Date of completion of supply - in continuous supply contracts
• Due date of payment as per contract terms for advance payments

1.9 Key Case Laws

1.10 Special Provisions

• Sub-contractor to main contractor - main contractor liable for GST on entire contract value
• Pure labour contracts without supply of goods - taxed as manpower supply service at 18%
• Transfer of business assets rule - if goods not consumed, transfer attracts GST
• Section 142(11) - Penalty for non-payment on residential apartments
• Anti-profiteering provisions applicable to ensure rate reduction benefit passed to consumers

2. GST Council

2.1 Constitutional Basis

2.2 Composition of GST Council

2.3 Voting Pattern and Quorum

2.4 Functions and Powers

2.4.1 Core Functions (Article 279A(4))

• Recommend taxes, cesses, surcharges to be subsumed in GST
• Recommend goods and services that may be subjected to or exempted from GST
• Recommend model GST laws, principles of levy, apportionment of IGST
• Recommend threshold limits for GST registration
• Recommend rates including floor rates with bands of GST
• Recommend special rates for raising additional resources during natural calamities/disasters
• Recommend special provisions for North-Eastern States, Jammu & Kashmir, Himachal Pradesh, Uttarakhand
• Decide date for implementation of GST

2.4.2 Advisory Functions

• Make recommendations on any dispute arising out of GST administration
• Recommend measures for harmonization of GST law across Centre and States
• Facilitate uniformity in GST implementation
• Examine and recommend composition levy, reverse charge mechanism
• Recommend place of supply rules

2.5 Organizational Structure

2.6 Powers and Limitations

2.7 Key Decisions and Recommendations

2.8 Important Amendments and Notifications

• Power to issue notifications based on Council recommendations vests with Central/State Governments
• Rate changes effected through notifications under Section 9 CGST Act
• Exemption notifications issued under Section 11 CGST Act
• Council reviews revenue impact of rate changes periodically
• Anti-profiteering mechanism established to ensure benefit of rate reduction passed to consumers

2.9 GST Council vs Union-State Relations

2.10 Judicial Pronouncements on GST Council

2.11 Secretariat and Administrative Support

• GST Council Secretariat located in New Delhi
• Secretary to GST Council - senior IRS officer
• Provides research, analysis, and drafting support
• Coordinates with State tax departments and CBIC
• Maintains records of Council proceedings and decisions
• Assists in implementation of Council recommendations

2.12 Special Features