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Accounts and Records - vAccounts and Records to be maintained under the GST Regime- Special requirements for works Contract Business.

The purpose of this article is to create awareness about the soon to be implemented Goods and Service Tax in India. This article is the fifth article of the series of articles on accounts and records to be maintained under GST based on GST Act and Accounts and Records Rules. This article covers special requirements applicable for Works Contract business.

As per section 2(119) of the CGST Act “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;

It is essential to note that work contract can arise only when the service is provided in the context of immovable property. It cannot arise in the context of movable property. The contractor must use some of his own material which will become the property of the recipient post the completion of service. If no material is involved it would essentially become provision of labour services and not works contract.

Every registered person executing works contract should keep separate accounts for each works contract showing the following:-

a.      The names and addresses of the persons on whose behalf the works contract is executed.

b.     Description, value and quantity (wherever applicable) of goods or services received for the execution of works contract.

c.      Description, value and quantity (wherever applicable) of goods or services utilized in the execution of each works contract.

d.     The details of payment received in respect of each works contract.

e.      The names and addresses of suppliers from whom he has received goods or services.

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ca rishabhkumarThe author is a fellow member of the Institute of Chartered Accountants of India and also a qualified Company Secretary. The author has also done DISA(ICAI), certificate on IFRS (ICAI), Certificate on Forex and Treasury Management (ICAI), Certificate on Forensic Accounting and Fraud Prevention (ICAI). The author practices as a Chartered Accountant under the name and style of Rishabh Kumar Barmecha and Associates and is an expert in auditing, financial investigation, direct and indirect taxation. The author can be reached at rishabhkumarbarmecha@gmail.com or 91 9007909221 or Twitter @CARKBarmecha.

CA Rishabh Kumar Barmecha

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