On October 19, 2023, the Ministry of Finance, Department of Revenue, Government of India, issued Notification No. 15/2023- Integrated Tax (Rate). This notification introduces amendments to tax rate conditions for specified services. These amendments are a result of the government’s commitment to ensure the fair and transparent application of tax rates. In this article, we will provide a detailed analysis of these amendments and their implications.
Detailed Analysis:
1. Amendments to Serial Number 8: The notification amends conditions for tax rates on services related to the hiring of motor cabs for transportation. It introduces a new condition that affects the input tax credit. If the supplier of input service in the same line of business charges integrated tax at a rate higher than 5%, the recipient can only claim a credit of input tax equivalent to the tax paid or payable at the rate of 5%. An illustration is provided to clarify this condition, emphasizing the importance of complying with the new regulation.
2. Amendments to Serial Number 10: Similar to the amendments in serial number 8, the changes made to serial number 10 concern the hiring of motor cabs for transportation. The conditions state that if the supplier of input service in the same line of business charges integrated tax at a rate higher than 5%, the recipient can only claim a credit of input tax equivalent to the tax paid or payable at the rate of 5%. Another illustration is provided to ensure complete understanding.
3. Amendments to Serial Number 34: This section sees two specific changes. Item (iv) now replaces the phrase “totalisator or a license to” with “licensing a.” Item (v) and its related entries have been omitted, suggesting a significant change in the application of tax rates for these services.
Conclusion:
Notification No. 15/2023- Integrated Tax (Rate) by the Ministry of Finance, Department of Revenue, Government of India, introduces critical amendments to tax rate conditions. These changes primarily impact services related to the hiring of motor cabs for transportation and certain licensing services. The key highlight is the introduction of a new condition that restricts the input tax credit for services provided by suppliers charging integrated tax rates higher than 5%. This amendment aims to standardize tax rates, ensuring that they are in line with the government’s public interest objectives.
The inclusion of illustrative examples helps taxpayers understand how these amendments will be applied in practical scenarios, offering clarity and guidance for compliance.
Effective from the 20th of October, 2023, these changes necessitate thorough understanding and adherence by both service providers and recipients. It is essential for businesses and taxpayers involved in the specified services to adjust their tax calculations and credit claims accordingly to avoid potential discrepancies and non-compliance issues.
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 15/2023- Integrated Tax (Rate) | Dated : 19th October, 2023
New Delhi, the 19th October, 2023
G.S.R. 760(E).-In exercise of the powers conferred by sub-sections (1), (3) and (4) of section 5, subsection (1) of section 6 and clauses (iii), (iv) and (xxv) of section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), read with sub-section (5) of section 15, sub-section (1) of section 16 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 8/2017- Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 683(E), dated the 28th June, 2017, namely:-
In the said notification, –
(A) in the Table,
(i) against serial number 8, in column (3), in item (vi), after the condition in column (5) against the rate of 5 percent, the following condition shall be inserted, namely:-
“Provided further that where the supplier of input service in the same line of business charges integrated tax at a rate higher than 5%, credit of input tax charged on the input service in the same line of business in excess of the tax paid or payable at the rate of 5%, shall not be taken.
Illustration: ‘A’ engages ‘B’ for transport from New Delhi to Jaipur in a motor cab for Rs. 1000. ‘B’, for supplying the said service, hires a motor cab with operator from ‘C’ for Rs. 800. ‘C’ charges ‘B’ integrated tax at the rate of 12% (Rs. 96). If ‘B’ charges ‘A’ integrated tax at the rate of 5%, he shall be entitled to take input tax credit on the input service in the same line of business supplied by ‘C’ only to the extent of Rs. 40 (5% of Rs. 800) and not Rs. 96.”;
(ii) against serial number 10, in column (3), in item (i), after the condition in column (5) against the rate of 5 percent , the following condition shall be inserted, namely:-
“Provided further that where the supplier of input service in the same line of business charges integrated tax at a rate higher than 5%, credit of input tax charged on the input service in the same line of business in excess of the tax paid or payable at the rate of 5%, shall not be taken.
Illustration: ‘A’ engages ‘B’ for transport from New Delhi to Jaipur in a motor cab for Rs. 1000. ‘B’, for supplying the said service, hires a motor cab with operator from ‘C’ for Rs. 800. ‘C’ charges ‘B’ integrated tax at the rate of 12% (Rs. 96). If ‘B’ charges ‘A’ integrated tax at the rate of 5%, he shall be entitled to take input tax credit on the input service in the same line of business supplied by ‘C’ only to the extent of Rs. 40 (5% of Rs. 800) and not Rs. 96.”;
(iii) against serial number 34,-
(a) in column (3), in item (iv), for the words “totalisator or a license to” , the words “licensing a” shall be substituted;
(b) in column (3), item (v) and the entries relating thereto shall be omitted;
(B) in the Annexure: Scheme of Classification of Services,-
(i) serial number 696 and the entries relating thereto shall be omitted;
(ii) serial number 698 and the entries relating thereto shall be omitted.
2. This notification shall come into force with effect from the 20th day of October, 2023.
[F.No. CBIC-1 90354/1 95/2023-TO (TRU-I I)-CBEC]
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: – The principal Notification Number. 8/2017- Integrated Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) , vide number G.S.R. 683 (E), dated the 28th June, 2017 and was last amended vide notification number 11/2023-Integrated Tax (Rate), dated the 26th September, 2023 published in the Gazette of India, Extraordinary, Part II , Section 3 , Sub-section (i) vide number G.S.R. 689(E), dated the 26th September, 2023.
