Hyderabad: The Union finance ministry and the state governments were not unanimous with regard to the Goods and Service tax (GST) imposed on government lift irrigation projects. The Union finance ministry stuck to 12 per cent GST on all government water projects while the state government advocated 5 per cent from the contractors.
However, in April this year, the state lost the negotiations with the Centre and the GST stands at 12 per cent for contractors and 18 per cent for sub contractors, according to the current law.
This burden does not fall on the state government. The contractors are now crying foul as they were caught unaware in the recent searches carried out by the Central GST sleuths against infra companies in the city. The contractors are caught midway because unless the state government clears their bills, 12 per cent GST cannot be paid.
Sources told Deccan Chronicle, “Since negotiations between the Union finance ministry and the state government did not turn in favour of the contractors, the state government agreed to the 12 per cent GST. In a letter dated April 24, it informed the contractors that the pending government bills for contractors who were allocated multi-crore lift irrigation projects, would be cleared so that they could pay the remaining 7 per cent GST.”
“Unless the government clears the pending bills, contractors will find it difficult to pay tax,” a contractor told this newspaper on condition of anonymity.