GST Rate for Video Conferencing System Integration Projects
The Rajasthan Authority for Advance Ruling decided that integrated video conferencing projects are composite services taxed at 18%, not works contracts.
- Ruling
- RAJ/AAR/2019-20/11 dated 03.06.2019
- 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
- The company asked if their video conferencing project was a works contract.
- The authority ruled it is a composite supply of services.
- The project is classified under HSN 998316.
- The applicable GST rate is 18%.
In short
The company asked the Rajasthan Authority for Advance Ruling (AAR) how to classify a project involving the supply, installation, and maintenance of video conferencing hardware and software. They argued it should be treated as a works contract, which carries a lower tax rate. The authority disagreed, stating the software is the main part of the deal, making the whole project a service.
What has changed
How it worked before
Businesses often assumed that projects involving both hardware installation and ongoing maintenance could be classified as works contracts to benefit from lower tax rates.
What has changed
The authority ruled that because the equipment is movable and the software is the essential part of the project, it is a composite supply of services. This means the entire project is taxed at 18% under HSN 998316, rather than the lower rate typically associated with works contracts.
Who this affects
IT system integrators and businesses that bundle hardware, software, and maintenance services into a single project.
An example
Imagine a business, TechSolutions, wins a contract to install smart classroom hardware and provide ongoing software support. They might wonder if they can classify this as a works contract at 12%. Based on this ruling, the tax department would likely view the software as the main service, classifying the entire project as a composite supply taxed at 18%.
What you should do
If you are in a similar position, do not assume this ruling applies to you. An advance ruling only binds the company that asked and their specific tax office. You should consult with your tax advisor to determine if your specific contract structure qualifies as a composite supply or a works contract.
If you do nothing
If you incorrectly classify your services as a works contract and pay a lower tax rate, you risk a tax demand notice during an audit. You would then be liable for the unpaid tax, plus interest and potential penalties. Relying on a ruling that does not apply to your specific contract is a common cause of these disputes.
The terms explained
- Composite supply
- A bundle of two or more goods or services that are naturally provided together in the ordinary course of business, where one is the main item.
- Works contract
- A contract for building, construction, or improvement of immovable property where both goods and services are transferred.
- Principal supply
- The main element of a bundle of goods or services that gives the entire supply its identity.
The ruling in detail
Authority for Advance Ruling
M/s Vedant Synergy Pvt. Ltd.
RAJ/AAR/2019-20/11 dated 03.06.2019 · Rajasthan
Questions before the authority
- What is the classification of goods and services supplied by the applicant?
- What will be the applicable rate of GST on goods and services supplied by the applicant?
Facts
The applicant participated in a tender for the selection of a System Integrator to implement and maintain a Software Video Conferencing (VC) solution for the Centre for e-Governance, Government of Karnataka. The project involves the supply, installation, and commissioning of various hardware components like MCUs, cameras, and speakers, alongside the provision of VC engineers, helpdesk support, and ongoing AMC services. The applicant contended that this arrangement constitutes a works contract service subject to 12% GST.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of goods and services | HSN 998316 (Information technology infrastructure and network management services) None |
| Applicable rate of GST | 18% (SGST 9% + CGST 9%) None |
The Authority ruled that the supply is a composite supply where the principal supply is the Video Conference software/solution, not a works contract. Consequently, the entire supply is classified under HSN 998316 and attracts a GST rate of 18%.
Reasoning
The Authority determined that the supply is a composite supply under Section 2(30) of the GST Act because the goods and services are naturally bundled with the VC software as the principal supply. It rejected the applicant's claim of a works contract under Section 2(119) because the supplied equipment is not of an immovable nature and can be dismantled. Relying on the definition of principal supply under Section 2(90), it concluded that the essential element is the VC software/network. Therefore, the supply falls under HSN 998316 as per Notification No. 11/2017-Central Tax (Rate).
Provisions relied on
- Section 2(30) of the CGST/RGST Act
- Section 2(90) of the CGST/RGST Act
- Section 2(119) of the CGST/RGST Act
- Section 8 of the CGST/RGST Act
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
For the practitioner
This ruling clarifies that IT-related system integration projects involving hardware and maintenance are generally treated as **composite supplies** of services rather than works contracts if the equipment is not immovable. It serves as a precedent for classifying integrated VC solutions under **HSN 998316** at an 18% tax rate. Practitioners should note that the classification hinges on identifying the **principal supply** within the bundle.
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/raj.aar-2019-20_11-vedant_synergy.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.