This circular provides clarification on whether GST is applicable on annuity payments received for construction of roads where part of the consideration is paid upfront and the balance is paid through deferred instalments (annuities).

It clarifies that exemption under Entry No. 23A of Notification No. 12/2017–Central Tax (Rate) applies only to services of providing access to a road or bridge on payment of toll or annuity, which fall under heading 9967 (supporting services in transport). This exemption covers operation-related services such as allowing access to roads or bridges, whether consideration is received as toll or annuity.

However, services relating to construction of roads fall under heading 9954, which covers general construction services of roads, highways, bridges and similar infrastructure. The circular clarifies that Entry No. 23A does not cover construction services, even if the consideration for such construction is received partly upfront and partly as deferred annuity payments over a period of time.

Accordingly, it is clarified that annuity payments received for construction of roads are not exempt from GST merely because they are received in a deferred manner. GST is applicable on such construction services in accordance with the relevant provisions and applicable rates. This clarification ensures uniform tax treatment of road construction projects involving annuity-based payment models.