The Builders Association of India the apex representative body of civil engineering construction companies including small medium and big contractors working on major construction and infrastructure projects including roads, irrigation etc. organized a meeting to discuss the challenges and the impact of GST implementation and its effect on the construction and infra industry particularly on the ongoing projects. The meeting was chaired by Sri S.N Reddy, National, Vice President, Builders Association of India, along with Sri B Sugunakar Rao State chairman Telangana in their office at R & B Building, Erramanzil with all the association members. The members demanded the government to exempt all existing projects, finalized before 30/06/2017 from GST and insisted that the old tax structure i.e. VAT to be followed. The members also demanded that the project costs to be revised under the GST regime for the balance works without affecting any additional financial burden to the existing contractors.
Speaking on the occasion Sri. S. N. Reddy, Vice President (national),BAI said “We are facing a lot of difficulties with the existing projects which have been sanctioned before 30/06/2017. All the members of the association who are executing the Government Projects are facing problems on implementation of GST, and have attended a meeting at Telangana BAI office on 07/09/2017and expressed their problems in implementation of GST for all Ongoing Works prior to 30/06/2017 and also resolved to follow the existing procedure in Tax structure i.e., VAT and to revise the project cost with GST regime for the balance works without effecting any additional financial burden to the existing contracts…. These projects have been sanctioned at the Pre GST, VAT rates and most of them come under service tax exempt category. The hasty implementation of Goods and Services Tax has made all these existing projects unviable as the impact of GST rates was not incorporated at the time of working out the project costs. Moreover the GST Regime warrants us to pay the applicable GST upfront and claim the input tax credit. This is further increasing the cost burden on the projects. Moreover there are very few GST registered vendors for all the input materials required and we rely heavily on the unorganized sector to source the raw material required to execute the projects on schedule. Till the backend is sorted, GST is having a severe negative impact on the construction sector.”
Adding to this Sri B Sugunakar Rao, BAI State Chairman, Telangana Statesaid, “The construction industry is the 2nd largest employment generator to the country, just next to agriculture. It is not justified that the Construction industry is burdened with the additional burden of GST. In the state of Telangana more than 1 lakh crore worth of projects were under progress as on 30/06/2017. For most of the infrastructure projects that are currently under implementation, the proposed GST rates could raise costs, if there is insufficient built in contingency factor and limited scope for contract renegotiation. This will have an adverse effect on the viability of these projects. We demand that the central Government and the Government of Telangana pays heed to our demand and takes immediate action to save the members working on the existing projects. It is necessary that all existing projects are treated as per old tax structure and the costs are revised for the balance part of the project to absorb the additional burden of GST. If this is not taken into account the work on these projects will have to be stopped. We urge the government to take immediate appropriate action to save the construction sector from the negative impact of GST else lot of the contractors will face severe financial problems.”