Various government departments have not passed contractors’ bills for over a month now stating Goods and Services Tax (GST) as the reason. Contractors and government sources alike say that there is no clarity on how much tax to collect and who is to pay the tax.
Though contractors have been submitting memorandums and meeting the respective department officials, payments even for bills submitted before the roll out of GST on July 1 have not been sanctioned, said sources.
“So far there has not been any service tax on contracts. Each department owes contractors crores of rupees. The Chennai Corporation alone has outstanding bills worth around ₹500 crore. It is the government that has to pay the tax and not the contractor,” said Rama Rao, Chennai Corporation Contractors Association.
No profit: contractors
S. Gunamani, president, PWD Contractors Association said that over 5,000 contractors across all departments in the State including PWD, Highways, Rural Development, Slum Clearance Board, Corporations and panchayats have either slowed down or completely stopped works.
“Unless the work is very urgent, they are not taking them up. We have already spent money and are waiting for the bills to be cleared and cannot spend more from our pockets,” he said adding that contractors should not be asked to pay taxes as they don’t make much profit. “In urban areas, we already suffer much due to delays in land acquisition and shifting of utilities. Bills are also not settled on time,” he said.
Mr. Gunamani said that if government does not pay up soon and decide on the GST issue, they have planned to go on strike. Official sources said that a decision would be taken soon.
