New Delhi: The GST rate on work contract services provided to government agencies under the definition of government authorities and government entities will be hiked to 18 percent from today. The rate hike does not apply to contracts awarded directly by Central Government Departments, State Government Departments, and Local Self Government Institutions.
They will continue with the current tax rate of 12 percent. The tax exemption will continue to apply to full-fledged services provided to local bodies for performing the functions prescribed by the Constitution and to work contract services involving less than 25 percent of the goods. However, if such services are made available by government authorities through government entities, they will be subject to 18 percent GST, the general rate, from January 1. The State Goods and Services Tax Commissioner has said that the new rate will be levied from January 1 on work contract services provided to government agencies subject to the rate hike.