GST Rate Changes Impact Civil Projects in Chennai

Recent adjustments in Goods and Services Tax (GST) rates have triggered a surge in costs for civil projects across Chennai, particularly impacting infrastructure endeavors like bridges, roads, and crematoriums. With revised rates, contracts involving pipeline work now face an increased GST rate, rising from 12% to 18%, while those involving earthwork have seen a similar escalation, climbing from 5% to 12%.

The Greater Chennai Corporation (GCC) and other local authorities are grappling with the financial ramifications, prompting revisions in project estimates. For instance, the Usman Road bridge project in T. Nagar witnessed a notable cost uptick from ₹131 crore to ₹164 crore, attributable to the GST rate revisions alongside escalating utility relocation expenses.

These adjustments, effective since July 18, 2022, have necessitated a reevaluation of project budgets, compelling municipal bodies to recalibrate their financial planning strategies to accommodate the heightened costs.