Summary
CBIC has increased the GST rate on works contracts relating to roads and bridges executed under Pradhan Mantri Gram Sadak Yojana (PMGSY) from 12% to 18% with effect from 18 July 2022, vide Notification No. 03/2022–Central Tax (Rate). The Ministry of Rural Development has issued a clarification letter to States/UTs for implementation of the revised rate.
Official notification issued by the Central Board of Indirect Taxes and Customs revising GST rate on PMGSY road and bridge works. The accompanying letter issued by the Ministry of Rural Development provides implementation guidance to States and Union Territories.
Frequently Asked Questions
After Notification No. 03/2022-CT(R), the GST rate on works contracts for roads and bridges under Pradhan Mantri Gram Sadak Yojana (PMGSY) has been increased from 12% to 18%, effective 18 July 2022. This revision was issued by CBIC and applies to all contractors executing PMGSY projects across India.
The revised GST rate of 18% on PMGSY road and bridge works contracts became effective from 18 July 2022, as notified by CBIC vide Notification No. 03/2022–Central Tax (Rate). Contracts executed or invoiced on or after this date are liable to the higher 18% GST rate instead of the earlier 12%.
CBIC issued Notification No. 03/2022–Central Tax (Rate) dated 13 July 2022, which increased the GST rate on works contracts relating to roads and bridges executed under PMGSY from 12% to 18%, effective 18 July 2022. The Ministry of Rural Development also issued a separate implementation letter to all States and Union Territories.
The rate revision under Notification No. 03/2022-CT(R) specifically covers works contracts under PMGSY. Other government road construction works may attract different GST rates depending on the scheme and nature of the contract. Pure services to government bodies may still qualify for exemption, so contractors must carefully classify each project under the applicable GST entry.
Contractors executing PMGSY road and bridge projects must charge GST at 18% on all invoices raised on or after 18 July 2022, irrespective of when the contract was signed. This impacts project cost calculations, running account bills, and final payments. Contractors should revise their billing systems and consult their GST consultant to avoid short-charging tax and consequent demand notices.