Question ID :
44872
GST on Centage Income
ABC Limited is a government company with 100 percent shares owned by State Government. They provide supervison services for Construction of Roads, Bridges. For this they receive a certain percentage of the Civil Works as CENTAGE.
So basically what happens, A Contractor XYZ Ltd for the construction services raises a Tax Invoice in the name of ABC Ltd. Suppose for Rs 100 they raised a Tax Invoice and charged 18 percent GST on it and the total Invoice Values becomes 118. Now considering Rs 100 as the civil works value ABC Ltd books a centage Income of 8 Rupees in their books. This will be paid by the concerned road construction department. Now does ABC Ltd requires to pay GST on this 8 rupees i.e. Centage Income. If no, why? If yes, then can ITC of Rs 18 be claimed?
Posted by
AMIT KUMAR
on
Jun 09, 2025
Filed Under
GST
Yes, ABC Ltd must charge GST @ 18% on its centage income of ?8.
No, ABC Ltd cannot claim ITC of the ?18 charged by XYZ Ltd, because that input service (construction) is not used for providing its output service (supervision).
The proper flow should be:
Contractor XYZ ? raises invoice on Department (not on ABC).
ABC Ltd ? raises separate invoice on Department for centage fees (with GST).
If the invoice is raised on ABC due to procedural requirement, then ABC must show it as received “as pure agent” on behalf of the Department and not take ITC.
Posted by
Gaurav Arya on
Aug 30, 2025