A tax uncertainty was reducing project profitability. Clarity changed the economics.
Situation
A company executing a large infrastructure project faced uncertainty over the GST treatment of its Intelligent Transport System (ITS) contract. The industry lacked clear guidance on whether the project attracted GST at 18% or qualified for the lower rate applicable to certain works contracts.
What was at stake
The contract value had been agreed GST-inclusive — so the applicable rate fed directly into project profitability. A higher rate meant higher cash outflows, thinner margins and uncertainty hanging over future compliance. Management needed clarity before committing further resources to the sector.
What we did
We approached the assignment from both a technical and a commercial perspective.
- Analysed the contractual structure and technical scope of the project
- Evaluated the nature of the assets created and their classification under GST law
- Reviewed judicial precedents, case law and prior advance rulings
- Developed the technical position: a composite works contract involving immovable property
- Represented the matter before the tax authorities
- Helped management evaluate the ruling’s implications for invoicing, compliance and future projects
Outcome
The Advance Ruling Authority accepted the position: the contract qualified for GST at 12% instead of 18%. Because the contract was GST-inclusive, the reduction flowed straight into project margins — with lower future litigation exposure and clear ground rules for invoicing. The ruling also gave management a stronger foundation to pursue similar infrastructure opportunities with confidence.
Why it matters
Tax advice creates the most value when it improves business decisions — not merely compliance outcomes. Clarity on one critical position improved profitability, reduced uncertainty, and gave management the confidence to expand in a growing sector.
