# Exemption: Construction Sector

## Three Exempt Items

### 1. Pure Labour for Housing Schemes

Services by way of pure labour contracts of construction, erection, commissioning, repair, maintenance, renovation or alteration of a civil structure under:

Housing for All (Urban) Mission, OR
Pradhan Mantri Awas Yojana (PMAY)

→ Exempt.

### 2. Pure Labour for a Single Residential Unit

Services by way of pure labour contracts of construction, erection, commissioning of original work pertaining to a single residential unit other than as part of a residential complex.

Only for original work (new construction).
Repair, renovation, maintenance are NOT covered in this clause.

### 3. Electricity Distribution Up to Farmer's Tubewell

Services by an electricity distribution utility for construction/erection/commissioning of an electricity network up to a farmer's tubewell → Exempt.

## Definition — Pure Labour Contract

Contract that supplies only services; goods are not involved.

## Decision Tree

```

Is it a pure labour contract?

No -> Not covered by these exemptions
Yes -> Under PMAY / HFA(Urban)? -> Exempt

Single residential unit, original work? -> Exempt

Electricity network to farmer's tubewell? -> Exempt

Otherwise -> Taxable

```

Worked example

### Example 1

Q. A contractor undertakes a pure labour contract for renovation of houses under PMAY.

A. PMAY covers renovation, repair, alteration when pure labour → Exempt.

### Example 2

Q. A pure labour contract for new construction of a single bungalow (not part of any complex).

A. Original work for a single residential unit → Exempt.

### Example 3

Q. Pure labour contract for repairs to a single residential bungalow.

A. Single-unit clause covers only original work, not repairs → Taxable.

### Example 4

Q. Contractor supplies materials + labour for HFA(Urban) project.

A. Not a pure labour contract (goods involved) → Taxable (exemption denied).

⚠️ Common exam mistakes

Exempting repair/renovation of a single residential unit — only original work qualifies under that clause; PMAY/HFA covers repair/renovation only because the scheme-based clause explicitly says so.
Granting the single-residential-unit exemption to a flat in a residential complex — it must be a standalone unit.
Treating composite contracts (with goods) as exempt — pure labour is mandatory.
Extending farmer-tubewell electricity exemption to general rural electrification — it is specifically up to the farmer's tubewell.

Reference: — Notification No. 12/2017-CT(R)

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Exemption - Construction Sector (Pure Labour Contracts)

Worked example

⚠️ Common exam mistakes