Who has to pay the GST? Contractors or Railway??

New Delhi: It appears to be a welcome decision that the Railway Board after one month of GST implementation date appointed a committee to look into the impact of GST on civil contracts giving them one month time for giving recommendations. Even if the committee gives a favourable report, will the Railway Board implement such recommendations?

The GST Council announced the GST slab and structure on May 20, 2017. So a total of about 3 or 4 months time has elapsed for the Railway Board to understand a simple tax structure and even after 4 months nobody knows what the so called committee and the Railway Board shall decide the fate of ongoing contracts?

The Railway Board has any other choice but to pay the GST as extra payment as the contractors not in any position to absorb the GST in his old contract price, so why this committee and wasting the time of the country and delaying the project’s completion time?

All contractors need to build pressure on the railway to absorb the tax at once instead of waiting for the committee to give its report. Railway Board is not building a rocket as it is a matter of GST and is a very simple one. The railway has the best brains of the country and if it has the willingness, it shall take just a few minutes to decide the GST issue on the ongoing projects.

It is a truth that even a track maintainer/gangman etc the railway spends about Rs. 40,000 per month and his efficiency of working after even 10 years of service are in doubt. The contractor pays just 25 percent of it, and takes a margin of profit of 8 percent and works at 200 percent efficiency of the permanent railway staff, so the contractor effectively is producing the same result at 15 percent of the cost.

Similarly, other earth work, bridge work, building works etc the contractor is doing at 50 percent cost to railway when compared to private sector costs. It is 2010 USSOR. The safety, service and efficient running of trains today lies on the contractors who are doing very hard work in the stiff competition atmosphere.

Do they fail to understand why the Railway Board is taking abnormal time in resolving the simple issue of GST? The Railway Board has to understand that today the contractors are the backbone of the railway system and cannot survive without them.

The contractor is a very smart, hard working and highly talented in his work and can find other sources to live but the railway cannot recruit lakhs of people and do its work. It is the utmost a responsibility of the Railway Board to protect the contractor for its own good health.

The negative thoughts on contractors should be discarded at once and should treat them as partners in progress.

So who has to pay the GST? Railway has to pay the Tax!!