Is cleaning the streets and collecting waste from households a ‘service’?
According to the Goods and Service Taxes regime, it is, and the ‘service’ attracts a tax of 18%.
The tax is being claimed on the contracts for cleaning the streets and segregating waste, hiring of autorickshaws and compacting trucks. Annually, the contracts are worth around ₹400 crore, which converts into an outgo of ₹72 crore from the coffers of the cash-strapped civic body.
“We have met GST officials and are awaiting clarity on these issues. Their claim that this is service is not acceptable. Yes, SWM (solid waste management) is a service, but it is for the city and not for profit,” says Sarfaraz Khan, Joint Commissioner (Health/SWM).
The next meeting with GST officials is scheduled in the coming week.
A few months ago, the erstwhile Sales Tax Department had sent a notice to the BBMP claiming non-payment of 12% sales tax on these contracts since 2014 (when a large number of services were removed from the exemption category).
The BBMP had replied to the notice.
S.N. Balasubramanyam of the Bruhat Bengaluru Garbage Contractors' Association places the fault on the BBMP for the confusion. “The Sales Tax Department had flagged the issue as BBMP contracts were not for ‘integrated’, or lump-sum, solid waste management, which is exempted. Instead, the contracts were divided into numerous works. This has not been rectified. The same problem has cropped up under the GST regime,” he said.
“However, even the act of considering waste management as a taxable service shows the lack of support from the government,” says Wilma Rodrigues, founder and CEO of Saahas Zero Waste, a social enterprise that manages waste collection. “There is no support either in prices of recycled products or GST. This is after all an essential service that needs relief,” she said.