Govt contractors threaten to stop work from July 16

Concerned that 18% tax on works contract under Goods and Services Tax (GST) would lead to heavy losses to them, thousands of government contractors have threatened to stop work if the state government does not agree to reimburse the additional tax outgo to them.

“We are not opposed to GST. We have been placed under the 18% tax slab. At present, we get 8% input tax credit, but the tax burden will go up by 10-12% under GST. There is no way we can bear this. We are asking the government to either move us to a lower tax slab of  5% or 12%, or to reimburse the additional tax that we would be required to pay under GST,” Arvind Patel, president of Gujarat Contractors’ Association, said.

Around 1,500 contractors met in Ahmedabad under the banner of Gujarat Contractors’ Association on Friday to discuss the impact of GST on them. The contractors decided to issue a 15-day ultimatum to the government to resolve the issue.

“If the issue is not resolved, contractors will go on strike from July 16. Thousands of crores worth of government and civic body works related to roads, buildings and pipelines will come to a standstill. We have also decided not to bid for new works from July 30 onwards,” he said, adding that they are hopeful that the government would listen to their “genuine query”.

The contractors are also demanding that the issue related to monetary impact on them due to steep hike of 80 to 250% in royalty be resolved at the earliest.