PUNE: Claiming that a high GST rate on old contracts is adversely affecting those in the business, a body of railway contractors from Pune threatened to go on strike on August 20. The Indian Railway Infrastructure Providers Association (IRIPA) held a press conference on Friday in this regard.
“There is no clarity as to how the GST will be implemented with respect to old railway contracts. Contractors have received no payments since July 1 on account of this confusion,” said Kulmeet Singh Chhabra, core committee member of IRIPA.
“We had recently met Railway Minister Suresh Prabhu with the request to come up with a solution, but to no avail,” said Chhabra.
“The tax has gone up from 5 per cent Value Added Tax (VAT) to 12 per cent GST. Most construction materials and the special equipment we need now attract 18 and/or 28 per cent GST. This has increased the operational costs of our ongoing projects. It is simply not possible for us to cover that cost,” said Chhabra.
The GST Council had pointed out that contractors can avail the benefit of Input Tax Credit (ITC). However, contractors say it is not possible as many of the raw materials are procured without bills, rendering it impossible for them to claim ITC. “If we trade with unregistered traders who do not generate bills, we will have to bear the reverse charge. We had not factored these additional cost burden while submitting tenders for railway projects,” said Keshav Aghav, Secretary, IRIPA.
“We have no options, we have decided to observe a nation-wide strike on August 20. We hope that the government acts in time and we are not forced to do anything that adversely affects railway operations across the country,” he added.
The representatives of the association had met with Additional Divisional Railway Manager Prafful Chandra and handed him the memorandum.