The city Corporation’s attempt to end the tender boycott by contractors citing the increased tax for civil works under the Goods and Services Tax (GST) system, failed yet again on Saturday. The local body which has been facing flak over the sorry state of roads following the monsoons, had pinned its hopes on the concessions offered by the State government two days back to contractors.
But, the contractors were of the opinion that the concessions offered were too little, considering the losses that they would sustain with the GST coming into force. The government had on November 1 offered a GST compensation of 5% for bituminous topping road work, if the bitumen is supplied by the department and a compensation of 3%, if the bitumen is supplied by the contractor. The local body has to generate the funds for this from its own funds,.
“The contractors effectively would not sustain much losses if the compensation package was accepted. They would also get 3% input credit if they produce bills for the purchases. Probably, this insistence on bills is one of the reasons for them being reluctant to accept this,” said a Corporation official.
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According to a contractors, the Corporation’s roads are to be constructed as per the Ministry of Rural Development’s road specifications, which makes it unviable for them.
“The MoRD specifications on the tar thickness and the rates for these are not viable for us. Also, the GST concessions are not provided for concreting work. I incurred ₹2.52 lakh losses from my last road project. Why should we continue doing this after sustaining losses?” askes Corporation contractor Rajan.
After the implementation of GST, all the contractors unions decided to boycott the tender process for works to be carried out on the city roads, citing the increase in their financial burden. Earlier, the tax for civil works were fixed at 6%, including Value Added Tax (VAT) of 4%, welfare fund contribution of 1% and income tax of 1%. Post-GST, this tax component had increased to 12%.
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