THIRUVANANTHAPURAM: Public works in Thiruvananthapuram Corporation continue to be at a standstill, as contractors here feel that the GST compensation offered in the LSGD Department order is unfair.
All Kerala LSGD Contractors’ Association has refused to budge, expressing discontent especially over the 3 per cent GST compensation for tarring work in which the bitumen is supplied by the contractor. Association representatives say that the compensation should be at least 7 per cent.
Contractors have to remit GST for the work as well as the materials purchased and labour hired. For a 1000-square-metre tarring work for which the estimate would be around '20 lakhs, the amount remitted as GST is '3.26 lakhs, according to the association president Jayachandran C. “Even after we deduct the amount we get back as input tax credit, we will be paying 6.76 per cent of the estimate as tax. In the government calculations, they have wrongly deducted 4 per cent as VAT, and arrived at 3 per cent as the compensation. This is wrong,” he says.
In contrast, works in the PWD roads have resumed as All Kerala Government Contractors’ Association has called off their strike. “We were okay with the compensation. In fact in many of the panchayaths, our member contractors have restarted work. It is only in Thiruvananthapuram Corporation that work is not moving,” says P Mohankumar, who was the chairman of the joint protest committee in which both PWD and LSGD contractors were part .
The LSGD order says that the compensation can be 5 per cent for tarring work in which the bitumen is supplied by the government institution. The government sets GST-TDS (Tax Deducted at Source) at 2 per cent. They have to pay 1per cent each as Income Tax and Kerala Construction Workers’ Fund. Corporation officials say that with an input tax credit of 4 per cent, the contractor will have in their hand at least 90 per cent of the amount spent.
Another issue with the LSGD order is that it is mum about compensation offered to ongoing works. However the Association is not emphasizing this.
