Is GST on Construction Supported in TallyPrime? Complete Works Contract & Real Estate GST Guide

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Introduction

GST on construction is one of the most complex areas of Indian taxation. Builders, developers, and contractors often struggle to understand which GST rate applies, when input tax credit is allowed, and how to correctly record construction transactions.

Many construction businesses face problems such as:

• Wrong GST calculation
• Confusion between works contract and supply
• Input tax credit rejection
• GST return mismatch
• Notices from GST department

The good news is — yes, GST on construction is fully supported in TallyPrime, provided it is configured correctly.

This article explains how GST on construction works, how TallyPrime supports it, and how builders and contractors can remain fully GST compliant using Tally.

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Understanding GST on Construction in India

Construction activities fall under works contract services, which involve both goods and services.

Under GST law:

• Construction is treated as service
• Different GST rates apply
• ITC rules vary depending on nature of project

Because of these complexities, proper accounting software becomes essential.

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Common GST Issues Faced by Construction Businesses

Construction companies commonly face:

• Incorrect GST rates
• Wrong classification of transaction
• ITC claimed when not allowed
• Missing RCM entries
• GST mismatch in returns

These issues usually arise due to improper accounting setup.

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Is GST on Construction Supported in TallyPrime?

✅ Yes, TallyPrime fully supports GST on construction and works contracts.

TallyPrime can handle:

• Works contract GST
• Contractor billing
• Sub-contractor payments
• Reverse Charge Mechanism (RCM)
• Input tax credit tracking
• GST return generation

All within a single system.

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Types of Construction Under GST

TallyPrime supports accounting for:

1. Works Contract Services

Applicable to government and private projects.

2. Real Estate Construction

Residential and commercial projects.

3. Sub-Contractor Services

Payments to labour contractors.

Each has different GST treatment, which can be configured in Tally.

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GST Rates Applicable in Construction

Typical GST rates include:

• 12% GST – works contract (with ITC)
• 18% GST – contractor services
• 1% or 5% GST – real estate projects (without ITC)

TallyPrime allows item-wise and ledger-wise GST configuration.

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Works Contract Accounting in TallyPrime

Works contract includes:

• Supply of material
• Labour services
• Contract execution

TallyPrime supports:

• Separate ledger classification
• Correct GST calculation
• Project-wise accounting

This ensures compliance with GST law.

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Contractor Billing in TallyPrime

Contractor bills can be recorded with:

• GST calculation
• Advance adjustment
• Retention deduction
• Balance payable tracking

Tally maintains accurate contractor accounts.

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Sub-Contractor GST & RCM Handling

Payments to subcontractors may attract:

• Reverse Charge Mechanism (RCM)

TallyPrime supports:

• Automatic RCM calculation
• RCM liability tracking
• Auto-population in GSTR-3B
• ITC claim after payment

This avoids GST mistakes.

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Input Tax Credit (ITC) Management

TallyPrime tracks ITC on:

• Cement
• Steel
• Electrical material
• Services

and ensures proper classification based on project type.

For real estate projects where ITC is blocked, Tally can restrict credit accordingly.

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GST on Material Purchases

Material purchases are recorded with:

• GST rate mapping
• Input credit tracking
• Supplier-wise reconciliation

This ensures accurate cost calculation.

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Client Billing & GST Invoices

TallyPrime supports:

• Stage-wise billing
• Running account (RA) bills
• GST invoices
• Advance receipt adjustment

This is especially useful for long-term construction projects.

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GST Returns for Construction Business

TallyPrime generates:

• GSTR-1
• GSTR-3B
• HSN summary
• RCM reports

These reports simplify return filing.

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Project-Wise GST Tracking

Using cost centres, Tally allows:

• Project-wise GST tracking
• Expense allocation
• Profitability analysis

This provides complete financial clarity.

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Retention Money Accounting Under GST

Retention money is common in construction.

TallyPrime supports:

• Retention ledger creation
• Deferred payment tracking
• Adjustment during final settlement

All GST-compliant.

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Advance Received From Clients

TallyPrime helps track:

• GST on advance (if applicable)
• Adjustment during invoicing
• Accurate reporting

This avoids mismatch during GST returns.

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Importance of Proper GST Setup

Construction GST must be configured correctly:

• Nature of transaction
• Taxability
• RCM rules
• ITC eligibility

Incorrect setup leads to GST notices.

Hence professional implementation is strongly recommended.

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Role of Tally Cloud in Construction GST

Construction businesses operate from multiple sites.

With Tally on Cloud, businesses can:

• Access GST data from anywhere
• Share live data with CA
• Avoid deadline pressure
• Monitor compliance remotely

This greatly improves GST management.

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Benefits of Cloud-Based Tally for Builders

• Multi-location access
• Secure data storage
• Automatic backup
• Real-time GST visibility
• Business continuity

Ideal for growing construction firms.

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About Binarysoft Technologies

Binarysoft Technologies is a trusted Authorized Tally Partner helping builders and contractors implement GST-compliant accounting solutions.

We specialize in:

• Construction GST setup
• Works contract configuration
• RCM and ITC mapping
• Project costing integration
• Tally on Cloud solutions
• Training and ongoing support

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Powered by Binarysoft Technologies – Authorized Tally Partner

Location:
1626/33, 1st Floor, Naiwalan, Karol Bagh,
New Delhi – 110005, INDIA

Contact us:
�� +91 7428779101
�� +91 9205471661
�� +91 8368262875

Email:
�� tally@binarysoft.com

Working Hours:
10:00 AM – 6:00 PM (Mon–Fri)

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Conclusion

GST on construction is complex — but TallyPrime fully supports construction GST when configured correctly.

With TallyPrime, builders and contractors can:

• Handle works contract GST
• Manage contractor billing
• Track RCM and ITC
• Generate GST returns
• Maintain audit-ready records

With professional implementation by Binarysoft Technologies, construction businesses can stay compliant, avoid penalties, and gain complete financial control.

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