Setting up the business: PAN, GST, bank, Udyam, labour

The PWD registration says you may bid. These registrations let you get paid, keep the money, and employ people without a notice arriving. Do them in this order.

1. Decide who the contractor is

A sole proprietorship is you, trading under a name; nothing to register, your PAN is the business's PAN, and it is how most Class IV and III contractors start. A partnership (registered under the Partnership Act, or an LLP) is common once two people put in money; the Code asks for the deed, all partners' photographs and, for firms and companies, the certificate under the relevant Act. A private limited company makes sense at Class II and above, when banks and nigams start asking for audited statements. Whichever it is, the same name must appear on the PAN, the GSTIN, the bank account, the PWD registration and every bid. Mismatched names are a technical rejection waiting to happen.

2. GST registration

Government works are a taxable service at 18% GST. Every bill you raise carries it, and the department deducts 2% GST TDSGST TDSGovernment departments deduct 2% GST at source (1% CGST + 1% SGST) on contract payments above ₹2.5 lakh. It shows up as a credit in your GST account, not a loss.Read in the glossary → against your GSTIN before paying you. Without a GSTIN you cannot raise a compliant invoice and the division will not pass the bill. Register under the regular scheme (the composition scheme is not available for works contract services), file GSTR-1 and GSTR-3B monthly or quarterly as your turnover allows, and reconcile the GST TDS credit that appears in your cash ledger. Module 6 covers the money side.

3. A current account in the same name

Department payments come by electronic transfer to the account you register on KPPP and in the agreement. Open a current account in the business's exact name, keep it active, and route every receipt through it: this account's statements are what your CA uses for the turnover certificate and what the bank uses for the solvency certificate. Cash receipts build no turnover.

4. Udyam registration (MSME)

Free, online, ten minutes at udyamregistration.gov.in with your PAN and Aadhaar. A works contractor with investment and turnover under the MSME limits qualifies. The benefits that matter for tenders: many tenders, especially goods and services, exempt registered MSMEs from the EMD and the tender fee; some give price preference; and the Udyam certificate is one of the documents that softens a bank's view of your credit. Karnataka's own MSME policy adds purchase preference for state procurement. Get it before your first bid and read each tender for what it grants.

5. Professional tax and the Shops Act

Karnataka levies professional tax on the business (an annual enrolment) and on employees (deducted monthly above a salary threshold), through the commercial taxes department. An office with staff also registers under the Shops and Commercial Establishments Act. Small, annual, and asked for in some ULB tenders.

6. EPF and ESI

EPF (provident fund) applies once you have 20 or more employees; ESI (health insurance) at 10 or more in Karnataka, for wages under the ESI ceiling. Contractors argue that site labour is casual and daily-rated; departments increasingly ask for EPF and ESI registration numbers in the tender's document list regardless, and some deduct if you cannot produce them. Register when you cross the thresholds, and treat the numbers as tender documents.

7. BOCW: the construction workers' registration

Under the Building and Other Construction Workers Act, an establishment employing 10 or more workers on a construction site registers with the labour department, and a 1% cess on the cost of construction is levied to fund the workers' welfare board. On government works the division deducts the {{bocw-cess|1% cess}} from your bills and pays it, so the money side is automatic; the registration of your establishment and the welfare-board enrolment of your workers is yours to do, and labour inspections at site ask for it.