Realtors hit the street, claim infra projects will grind to halt without exemption in tax regime

HYDERABAD: The works on state government's

infrastructure projects

may come to a grinding halt on September 15, if the

GST Council

, in its meeting to be held on Saturday, does not heed the demands of the

Builders Association of India

(BAI), a body representing civil engineers and construction companies, including contractors working on road and irrigation projects, among others.

BAI organised a dharna on Friday demanding a rollback of the GST being levied on projects that have been finalised before June 30, 2017. “We want the Union government to exempt all the existing projects that were finalised before June 30, 2017, from GST and instead follow the old tax structure,“ BAI vice-president (national) SN Reddy said.

Under GST, the parties will have to shell out 12% while under VAT they had to pay only 5%. Reddy explained that the contractors, while estimating the overall costs of the projects (that were finalised before June 30), had taken only 5% VAT into account and accordingly locked capital, but now due to a higher rate of taxation under GST, the contractors were facing a problem in executing projects and deploying capital. “Most of the projects that were sanctioned during the pre-GST era, came under service tax exempt category . The hasty implementation of GST has made all these existing projects unviable as the impact of GST rates not accounted for while working out the project costs. Moreover, the GST regime warrants us to pay the applicable GST upfront and claim the input tax credit. This is further increasing the cost burden on the projects as there are very few GST registered vendors for all the input materials required and we rely hea vily on the unorganized sector to source raw material,“ he explained.

Reddy pointed that around Rs2 lakh crore worth of government projects are underway in Telangana alone and if BAI decides to stop work, around 1 crore jobs will be impacted.

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