This circular provides clarification on the applicable GST rate for construction services supplied to a Government Entity in relation to projects such as construction of a ropeway on a turnkey basis.

It clarifies that the concessional GST rate of 12% under Entry No. 3(vi) of Notification No. 11/2017–Central Tax (Rate) applies only to works contract services provided for construction of civil structures or original works meant predominantly for use other than commerce, industry, business or profession. Although the explanation to this entry excludes activities undertaken by Central or State Governments as public authorities from the scope of “business,” this exclusion does not extend to Government Entities or Governmental Authorities.

The circular further clarifies that structures such as ropeways, typically constructed for tourism or commercial development, are not meant predominantly for non-business use. Such projects are also not covered under other concessional entries relating to roads, bridges, terminals or railways. Accordingly, construction of ropeways provided as works contract services to Government Entities does not qualify for the 12% concessional rate.

It is therefore clarified that works contract services for construction of ropeways fall under Entry No. 3(xii) of Notification No. 11/2017–Central Tax (Rate) and attract GST at the rate of 18%. This clarification ensures consistent tax treatment of such infrastructure projects.