The Hindu       10.08.2017 

Tough choices ahead for Corporation

The
city Corporation is left with some hard choices to bring an end to the
tender boycott by its contractors after the implementation of Goods and
Services Tax (GST) which has stalled road works in the city. It could
either revise the estimates by cutting down on the volume of work, thus
earning the displeasure of the councillors or bear the extra costs from
its own funds, at a time when it is reeling from loss of entertainment
revenues.

The Mayor has called for a meeting with representatives
of the six contractors’ unions in the city Corporation to bring an
amicable settlement to the issue. Officials from the Taxes Department
will also participate to communicate with the contractors.

Last
month, all the contractors unions decided to boycott the tender process
for works to be carried out in the city roads, citing the increase in
their financial burden after the implementation of GST. Earlier, the tax
for civil works were fixed at 6%, including Value Added Tax (VAT) of
4%, welfare fund contribution of 1% and income tax of 1%. Post- GST,
this tax component has increased to 18%.

Thin margin

“Already,
we were having only a thin margin of profits for works taken up in the
Corporation. The GST has come as a huge blow. We decided to stay away
from the tender process as there was no point in it, if we are not
getting any profits from this. The issue can be solved if the
Corporation is ready to bear the extra burden,” says contractor Anil.

Though
the Corporation officials are hinting at a reduction of the tax to 12%
by the GST council, no official decision has been communicated yet.

“By
the time GST was implemented, we had got the technical sanctions and
began the tender process. Only, VAT was considered in these estimates.
Now, revising the estimates is not practical. The councillors will not
agree to the cutting down of the already estimated works. The State
Government has to take a decision on whether we can revise the estimates
or make it up from our own funds. More clarity will be there after the
government publishes a revenue note regarding this,” said the
Corporation Mayor V.K.Prasanth.

Meanwhile, contractors who are not
part of any of the six unions, bid successfully for the tenders of few
works in the Kazhakuttam zone. The unions are seeing this as an attempt
by the local body to defeat their tender boycott.