GST blues: MES contractors payments held up

NAGPUR: In what is being seen as a post GST impact, bills of more than 1,500 contractors catering to Military Engineering Services (MES), have been held up. The matter has been taken up with the defence secretary.

MES takes up civil and electrical works for the armed forces. A large number of private contractors are engaged to execute the jobs.

"There has been a major confusion over implementation of GST rules, after the new tax was implemented. The payments are sanctioned through offices of Controller of Defence Accounts (CDA). There are 17-18 CDA offices in the country. Except 3-4 including that governing Nagpur area, offices across the country have held up the payments," said Balbir Singh Vij.

A contractor from Nagpur, Vij is the newly elected general secretary of MES Builders Association of India (MES-BAI). "Since it concerns the defence forces, work has not been stopped despite the problem. The defence secretary has assured the association that the matter will be resolved. Instructions to release payments will be out in a day or two." he said.

 

  

Vij said there is a confusion on whether GST has to be deducted at the time of payment, or it will be borne by the contractor. The contractors have insisted that the notification on deducting the tax at source has not been issued yet. In that case the tax need not be deducted.

Earlier the MES contractors were supposed to pay around 9% of levy which included service tax and works contract tax. Now with GST they come under the 18% bracket.

The association has demanded that the extra tax to be charged for payments of works done till June 30 should be refunded, he said. Even ongoing works will be covered under GST. Since MES contractors get payments in phases, GST will be levied on funds released after July 1 for the work done before June 30, he said.

It has also been demanded that in new tenders, the cost of the contract should be calculated without GST. The tax should be added on the total amount of bid, he said.

Source:::  The Times of India, dated 22/07/2017.