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How the construction services will get restructured under GST law ? What will be the impact of GST on its profitability and cash flows? How can construction services would be eligible to take credit under transitional provisions?

Author: CA Mitesh Katira
Posted On: Monday 17 July 2017



Client is a construction company into the business of development of residential complexes. They had a few ongoing sites wherein the construction was completed for more than 50% and there was stock in hand on 1st of July 2017. 

GST was levied wef 1st of July and the rate of tax for such projects went up drastically. Taxes like service tax and vat that were paid on the project till date subsumed into GST.
First of all the client wanted to understand the new rate structure and credit model of GST. They also wanted calculate the impact on profitability, cashflow, etc due to GST. Also Client wanted to implement GST and entirely restructure their business model to take credit of GST.


APMH got an expert from its team who has handled complex indirect tax matters for the real estate and construction business involved in the project. The team studied the business impact with respect to provisions of GST. 
Team developed the GST impact analysis with detailed suggestions on changes required to be done in the business model and relevant compliance to take maximum credit.
Team also discussed and clarified the procedural aspects required for the construction industry like time of supply, invoicing, etc and helped the IT team adopt to such changes in the ERP system. 
The construction company is now live with GST and able to handle the day to day stuff smoothly. It is preparing for the transition filing to claim the transition credit and also training the team for handling the GST returns. 

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