Contractor bill › GST on works contract

GST on works contract bills

Construction, repair or installation work where materials and labour go into immovable property is a works contract, a service under GST.

The usual rate: 18%

Works contract service (SAC 9954) is taxed at 18% in most cases. Government works that were earlier at a concessional 12% moved to 18% with the GST rate changes from 22 September 2025. A few kinds of work have other rates or are exempt under specific notification entries.

Choose 18% unless your work order or your accountant tells you otherwise; "Other rate" lets you type a different rate, and "No GST" covers exempt work or a contractor who is not registered.

CGST + SGST or IGST

For work on property, the place of supply is where the property is. Work in your own state carries CGST + SGST; for a site in another state the rules on registration and IGST need your accountant’s advice. The bill shows the split from the states you enter.

GST on which value?

GST is worked out on the value of work in this bill. Deductions the client makes (retention, TDS, recoveries) do not reduce the GST; they are only a way of paying the bill.

Sub-contractors

A sub-contractor bills the main contractor the same way, with GST. The main contractor can usually take input tax credit of it for its own works contract output, if conditions are met.