GST Rate for Works Contracts Provided to Governmental Authorities
The Karnataka Authority for Advance Ruling confirmed that works contracts for governmental authorities are now taxable at 18% GST.
- Ruling
- Advance Ruling No. KAR ADRG 08/2023 dated 17.02.2023
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- BWSSB is classified as a governmental authority under GST law.
- Concessional GST rates for these services were removed after January 2022.
- Works contracts for these entities now attract an 18% GST rate.
In short
The company asked if their water treatment project for the Bengaluru Water Supply and Sewerage Board (BWSSB) qualified for lower tax rates. The authority examined whether BWSSB counts as a governmental authority and what the current tax rate is for these construction services.
What has changed
How it worked before
Businesses previously relied on various notifications that allowed for concessional GST rates when providing works contract services to government-linked bodies.
What has changed
The authority confirmed that because specific entries for concessional rates were removed by government notifications, these services now fall under the standard 18% tax category. This means businesses must charge the full rate rather than the lower rates that may have applied in the past.
Who this affects
Construction firms and contractors providing infrastructure services to state-run water boards or similar governmental authorities.
An example
Imagine a construction firm, BuildWell Infra, that builds sewage plants for a state water board. They might wonder if they can still charge a lower GST rate based on old rules. This ruling suggests that because the concessional entries were removed, they must now charge 18% GST on their invoices.
What you should do
This ruling only applies to the specific company that asked the question. If you provide similar services, you should consult with your tax advisor to see if your specific contract qualifies for any other exemptions, as this ruling is not a general law for all businesses.
If you do nothing
If you assume this ruling applies to you and charge the wrong tax rate, you risk a demand notice from your local tax officer. You would then be liable for the unpaid tax, plus interest and potential penalties for incorrect filing. Always verify your specific tax liability with a professional rather than relying on a ruling meant for another company.
The terms explained
- Governmental Authority
- An entity established by an Act of Parliament or State Legislature to carry out functions related to local governance, such as water supply or sewage management.
- Works Contract
- A contract that involves both the supply of goods and services, typically used in construction or infrastructure projects.
- Advance Ruling
- A formal decision provided by tax authorities to a specific business regarding how GST laws apply to their particular transaction.
The ruling in detail
Authority for Advance Ruling
M/s Suez India Private Limited
Advance Ruling No. KAR ADRG 08/2023 dated 17.02.2023 · Karnataka
Questions before the authority
- Whether the services provided to Bengaluru Water Supply and Sewerage Board would be considered as a service provided to a governmental authority under GST Laws?
- What is the applicable GST rate on supply of works contracts services in relation to sewage treatment made by the Applicant to Bengaluru Water Supply and Sewerage Board, on or after 1st Jan 2022?
Facts
The applicant entered into a contract with the Bengaluru Water Supply and Sewerage Board (BWSSB) for the design, upgradation, and rehabilitation of existing water treatment plants. The applicant sought clarity on whether BWSSB qualifies as a governmental authority and the applicable GST rate for these works contract services on or after January 1, 2022.
Ruling
| Question | What the authority ruled |
|---|---|
| Status of BWSSB as a governmental authority | Yes, considered a service provided to a governmental authority Based on its establishment by the Bangalore Water Supply and Sewerage Act 1964 |
| Applicable GST rate on or after 1st Jan 2022 | 18% (CGST at 9% and SGST at 9%) Covered under entry 3(xii) of Notification No. 11/2017-Central Tax (Rate) |
The Authority ruled that BWSSB qualifies as a governmental authority under GST laws. Consequently, the works contract services provided by the applicant to BWSSB are subject to GST at the rate of 18%.
Reasoning
The Authority determined that BWSSB is a governmental authority as it was established by a State Act to perform functions entrusted to a Municipality under Article 243W of the Constitution. Regarding the tax rate, the Authority noted that previous concessional rates for services to governmental authorities were amended by Notification No. 15/2021-Central Tax (Rate) and subsequent notifications. As a result, the specific entry for concessional rates was omitted, and the services now fall under the residual category of construction services taxable at 18%.
Provisions relied on
- Section 97(2)(e) of the CGST Act, 2017
- Section 2(119) of the CGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 15/2021-Central Tax (Rate) dated 18.11.2021
- Notification No. 22/2021-Central Tax (Rate) dated 31.12.2021
- Notification No. 3/2022-Central Tax (Rate) dated 13.07.2022
For the practitioner
This ruling confirms that BWSSB is a **governmental authority** for GST purposes. It clarifies that due to the withdrawal of concessional tax entries for works contracts provided to governmental authorities, such services are now **taxable at 18%**. Practitioners should note that this ruling specifically addresses the post-January 2022 tax landscape following the relevant notification amendments.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/knaar_order_no.082023suez_india_private_limited_1.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
About Patron Accounting LLP
Patron Accounting LLP is a CA and CS-led accounting and compliance firm that has been working with businesses across India since 2019. We handle the work that keeps a company correct with every department it answers to: day-to-day bookkeeping and accounting, GST registration and returns, income tax filing and assessments, TDS, payroll and PF/ESI, company and LLP incorporation, ROC and MCA compliance, statutory and internal audit, physical stock and inventory audits, trademark and other registrations, and the certificates and reports that banks, buyers and regulators ask for.
Our clients range from a first proprietorship registering for GST to established companies running operations across several states. Much of our work is exactly this: reading what a department has published and telling a business, in plain terms, whether it changes anything for them.
We operate from five offices and serve clients across the rest of India remotely:
- Pune (HQ): RTC Silver, B4-708, Sai Satyam Park, Wagholi, Pune, Maharashtra 412207
- Mumbai: 104, Rajshila Building, 597 J.S.S. Road, Marine Lines, Mumbai 400002
- Delhi: 3rd Floor, B-6/154-155, Sector 5, Rohini, Delhi 110085
- Gurugram: Pioneer Urban Square, B109, Golf Course Ext Road, Sector 62, Gurugram 122098
- Ahmedabad: Phoenix Tower, 1107, near Commerce Six Road, Drive In Road, Navrangpura, Ahmedabad, Gujarat 380009
If anything on this page affects you and you would like somebody to look at your own position, we are glad to help. Call +91 94594 56700, write to sales@patronaccounting.com, or visit patronaccounting.com. The first conversation costs nothing.