Contractors across state stop working due to GST issues

Mumbai: Nearly 65,000 small and medium scale government contractors across the state have stopped working due to payment-related issues over the goods and services tax (GST). The contractors are getting a 12 per cent deduction on their overall bills even as government officials cite the 12 per cent GST norm. Hence, they have stopped working in almost all districts, which is affecting a 2.5 to 3 crore-strong labour force in the state.

Mostly, contractors working with the state's public works and development department (PWD) and zilla parishads are facing this problem. Nearly 65,000 contractors have pending bills of Rs 3,200 crore since the financial year 2013-14. With introduction of GST, they are now facing serious problems.

Milind Bhosale, chairman, Maharashtra government contractors association, said, "Our contractors have bought raw materials by paying VAT and other taxes since 2013. In such a case, government applying GST to them is illogical. But while clearing bills, contractors have to pay 12 per cent on their total work bill as GST. It is breaking the contractors' economy."

These contractors generally deal with school and government office building and maintenance issues, road construction, pothole filling etc. Out of the Rs 3,200 crore pending bills, Rs 2,400 crore are only for pothole filling. However, with the government having applied GST, these contractors have almost stopped filing tenders and completing ongoing works.

Bhosale said, “We called upon PWD minister Chandrakant Patil for help. But he refused, saying he is unable to intervene in the matter."

The PWD minister told The Asian Age, "It is right that contractors are not working. But we have met them. The number of these contractors is not so high. We have given him in writing that money will be reimbursed for work done before GST."