Relief for Road Contractors; NHAI to pay GST on Annuity under HAM Model

Circular NH-24028/22/2020-H Dated 27th August, 2021

The Government, after the 43rd Meeting of GST Council, clarified that Sl. No. 23A of exemption Notification issued for services would not be applicable to the annuity amount paid by the NHAI to the Road Contractors for construction services. The clarification created hue and cry in the industry as Road Contractors were supposed to pay GST to the Government under forward charge mechanism.

Now, after considering the representations from the industry, the Ministry of Roads Transport and Highways has issued a clarification on applicability of GST on road construction under HAM Mode. It has been clarified that NHAI will reimburse payment of GST on annuity amount up to June 16, 2021 wherever applicable. However, for period after June 16, 2021, GST would be payable by contractors on Annuity and interest amount & TDS under GST would also be applicable.

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