BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.
Contractors play a key role in construction, infrastructure, and public works. Whether you’re a private builder or working with the government, GST directly affects your billing, compliance, and project cost. This blog explains the gst rate for contractors, how it varies by service type, and what to include in a contractor’s bill.
Under Goods and Services Tax (GST), a contractor is any person or company providing construction, repair, fabrication, or related services, either to:
Contractor services are treated as “works contract services”, especially when they involve both labour and material supply.
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| Type of Contractor Work | SAC Code | GST Rate |
|---|---|---|
| Civil construction (buildings, roads, bridges) | 9954 | 18% |
| Labour-only contract | 9985 | 18% |
| Sub-contracts under main contractor | 9954 / 9985 | 18% |
The gst on labour contractor is 18%, applicable when:
| Nature of Work | GST Rate | Comments |
|---|---|---|
| Works contract for Central/State Government | 12% | If for infrastructure or non-commercial use |
| Works contract for commercial government buildings | 18% | Includes offices, housing, etc. |
| Labour contract for government projects | 18% | Unless specifically exempted |
If you’re billing the government or another registered under GST entity, use their GSTIN and mention if the tax is under forward charge or Reverse Charge Mechanism (RCM).
Contractors can claim Input Tax Credit on:
As long as the project is taxable under GST, you can offset your input GST against your output tax liability.
Understanding the gst rate for contractor services helps in correct billing, better project pricing, and smooth compliance—whether you’re building a home, managing labour, or working on a government project.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.