This E-book for GST on services is updated till 10-08-2018 and is based on following sections, notifications, orders, press release etc.

CGST Sections: 2(12), 2(33), 2(68), 2(70), 2(71), 2(98), 2(102), 2(110), 2(118), 2(119), Schedule II, 9(5), 10(1)(b), 10(2), 13, 17(4), 17(5), 31(2), 31(3)(d), 31(5), 31(6), 34(1), 34(2), 35(2)

IGST sections: 2(6), 2(11), 2(13), 2(14), 2(15), 2(16), 2(17), 12, 13, 14

CGST Rules: 14, 31, 32, 33, 34(2), 38, Expl below 42,43, 47, 54, 56(13), 56(14), 58,64

CGST Rate Notifications 11/2017,12/2017, 13/2017, 14/2017,15/2017, 17/2017, 18/2017, 20/2017,21/2017, 22/2017, 23/2017, 24/2017,25/2017, 30/2017, 31/2017, 32/2017,33/2017, 46/2017, 47/2017, 1/2018, 2/2018. 3/2018, 4/2018, 5/2018, 13/2018, 14/2018, 15/2018, 16/2018,17/2018]

IGST Rate Notifications: 2/2017, 10/2017

CGST Circulars: 11/2017, 16/2017, 19/2017, 27/2018, 28/2018, 50/2018, 32/2018, 34/2018, 35/2018, 44/2018, 47/2018, 48/2018, 51/2018, 52/2018, 55/2018

Orders 2/2018

CBIC Press Release: 54/23-05-17, 56/26-5-17, 59/12-6-17, 61/15-6-17, 69/7-7-17, 76/13-7-17, 77/13-7-17, 81/15-7-17, 83/18-7-17, 92/23-8-17, 103/28-9-17,123/12-12-17, 132/18-1-18, 133/18-1-18, 134/18-1-18, 135/18-1-18, 162/28-5-18

Service Tax Circulars: 210/2/2018-ST dated 30-5-18, 209/1/2018-ST dated 04-05-2018, 207/5/2017-ST dated 28-09-2017

Definition of Service

“services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; [S. 2(102) of CGST Act]

Applicability to Composition Taxable Person

The registered person shall be eligible to opt under composition scheme if he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II [i.e. Supply of foods and beaverages for which tax rate under composition scheme is 5%] [S. 10(1)(b) and 10(2)(a)]

Classification of Activities as Supply of Service [Schedule II]

1 Any transfer of right in goods or of undivided share in goods without the transfer of title thereof [Para 1(b)]
2 Any lease, tenancy, easement, licence to occupy land Para 2(a)
3 Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly Para 2(b)
4 Any treatment or process which is applied to another person’s goods Para 3
5 Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such

Goods

Para 4(b)
6 Renting of Immovable Property Para 5(a)
7 construction of a complex, building, civil structure or a part thereof,

including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

Para 5(b)
8 Temporary transfer or permitting the use or enjoyment of any intellectual property right; Para 5(c)
9 Development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software Para 5(d)
10 Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; Para 5 (e)
11 Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration Para 5(f)
12 Works contract as defined in clause (119) of section 2

Section 2(119)

works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property

wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract

Para 6(a)
13 Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. Para 6(b)

Classification Issues in Services

1. Issue : Whether activity of bus body building is supply of goods or services ?

Clarification: In the case of bus body building there is Supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case.
[Circular 34/2018 dated 01-03-2018]
Further clarified in Circular 52/26/2018 dated 09-08-2018

“…………………..

12.1 Applicable GST rate for bus body building activity: Representations have been received seeking clarifications on GST rates on the activity of bus body building. The doubts have arisen on account of the fact that while GST applicable on job work services is 18%, the supply of motor vehicles attracts GST @ 28%.

12.2 Buses [motor vehicles for the transport of ten or more persons, including the driver] fall under headings 8702 and attract 28% GST. Further, chassis fitted with engines [8705] and whole bodies (including cabs) for buses [8707] also attract 28% GST. In this context, it is mentioned that the services of bus body fabrication on job work basis attracts 18% GST on such service. Thus, fabrication of buses may involve the following two situations:

a) Bus body builder builds a bus, working on the chassis owned by him and supplies the built-up bus to the customer, and charges the customer for the value of the bus.

b) Bus body builder builds body on chassis provided by the principal for body building, and charges fabrication charges (including certain material that was consumed during the process of job-work).

12.3 In the above context, it is hereby clarified that in case as mentioned at Para 12.2(a) above, the supply made is that of bus, and accordingly supply would attract GST @28%. In the case as mentioned at Para 12.2(b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly…………………….”

2. Issue :Whether retreading of tyres is a supply of goods or services?

Clarification: In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Rubber used for retreading is an ancillary supply. Which part of a composite supply is the principal supply, must be determined keeping in view the nature of the supply involved. Value may be one of the guiding factors in this determination, but not the sole factor. The primary question that should be asked is what is the essential nature of the composite supply and which element of the supply imparts that essential nature to the composite supply. Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded tyres, is a supply of goods (retreaded tyres under heading 4012 of the Customs Tariff attracting GST @ 28%)

[Circular 34/2018 dated 01-03-20183-2018]

3. Issue :

How is servicing of cars involving both supply of goods (spare parts) and services (labour), where the value of goods and services are shown separately, to be treated under GST?

Clarification:

2.1 The taxability of supply would have to be determined on a case to case basis looking at the facts and circumstances of each case.

2.2 Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately.

[Circular 47/21/2018 dated 08-06-2018]

Place of Supply for Services

Place of supply of services in case of Domestic Supplies [Section 12]

(Where the location of supplier of services and the location of the recipient of services is in India)

“location of the recipient of services” means,—

(a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and

(d) in absence of such places, the location of the usual place of residence of the recipient;

[S. 2(70)]

“location of the supplier of services” means,—

(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and

(d) in absence of such places, the location of the usual place of residence of the supplier;

[S. 2(71)]

In respect of the following 12 categories of services, the place of supply is determined with reference to a proxy. Rest of the services are governed by a default provision.

S.No. Nature of Supply of Service Place of Supply
12(3)(a) Directly in relation to:1. Immovable Property2. Including Services provided by a) Architectsb) Interior Decoratorsc) Surveyorsd) Engineers and Other Related Experts ore) Estate Agents3. Services provided by way of grant of right to use immovable property4. Carrying Out of Construction Work5. Co-ordination of Construction Work Location at which the immovable property or boat or vessel is located or intended to be located

Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.

It shall apply where location of recipient is in India

Explanation.––Where the immovable property or boat or vessel is located in more

than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately

collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

12(3)(b) Lodging Accommodation by:

1. Hotel

2. Inn

3. Guest House

4. Home Stay

5. Club or Campsite, by whatever name called

6. Including House Boat or any other Vessel

12(3)(c) Accommodation in any many Immovable Property for organizing any:

1. Marriage

2. Reception

3. Matters Related there to

4. Official Functions

5. Social Functions

6. Cultural Functions

7. Religious Functions or

8. Business Functions

9. Including services in relation to such functions at such property

12(4) 1. Restaurant and catering services,

2. personal grooming,

3. fitness,

4. beauty treatment

5. Health service Including

a) Cosmetic Surgery and

b) Plastic Surgery

Location where the services are actually performed
12(5) Training and performance appraisal B2B: Location of such Registered Person

B2C: Location where the services are actually performed

12(6) Admission to :

1. Cultural Event

2. Artistic Event

3. Sporting Event

4. Scientific Event

5. Educational Event

6. Entertainment Event

7. Amusement Park

8. Admission to any other place

9. Ancillary Services

Place where the event is actually held or where the park or the other place is located
12(7) (a) Organization of :

1. Cultural Event

2. Artistic Event

3. Sporting Event

4. Scientific Event

5. Educational Event

6. Entertainment Event

Including Supply of Service in relation to:

1. Conference

2. Fair

3. Exhibition

4. Celebration or

5. Similar Events

B2B: Location of such Registered Person

B2C: Location where the event is actually held

and if the event is held outside India, the place of supply shall be the location of the recipient

It shall apply where location of recipient is in India

Explanation.––Where the event is held in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in each of the respective

States or Union territories in proportion to the value for services separately collected

or determined in terms of the contract or agreement entered into in this regard or, in

the absence of such contract or agreement, on such other basis as may be prescribed.

12(7)(b) Services Ancilliary to organization of events or services referred in 12(7)(a)

OR

Assigning of Sponsorship to such events

12(8) Transportation of goods, including mails or courier B2B: Location of such Registered Person

B2C: Location at which such goods are handed over for their transportation

12(9) Passenger Transportation B2B: Location of such Registered Person

B2C: Place where the passenger embarks on the conveyance for a continuous journey

Return Journey is separate Journey

Explanation.––For the purposes of this sub-section, the return journey shall be

treated as a separate journey, even if the right to passage for onward and return journey is issued at the same time.

Where Point of Embark is not Known

Provided that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in accordance with the provisions of sub-section (2).

[E.g. Circular Journey Tickets where fare is paid according to distance and not for distance between two stations]

12(10) Services on board a Conveyance, Including

1. a vessel,

2. an aircraft,

3. a train or

4. a motor vehicle,

Location of the first scheduled point of departure of that conveyance for the journey
12(11) Telecommunication Services including data transfer, broadcasting, cable and direct to home television services

Telecommunication service” means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means

[S. 2(110)]

12(11)(a) Services by way of

1. Fixed telecommunication line,

2. Leased circuits,

3. Internet leased circuit,

4. cable or

5. dish antenna,

Explanation.––Where the leased circuit is installed in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such circuit, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

Location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;
12(11)(b) Mobile connection for telecommunication and internet services provided on post-paid basis, Location of billing address of the recipient of services on the record of the supplier of services
12(11)(c) Mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means
12(11)(c)(i) Through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher Address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply
12(11)(c)(ii) By any person to the final subscriber, Location where such prepayment is received or such vouchers are sold;
12(11) 2nd Proviso If such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment The location of the recipient of services on the record of the supplier of services shall be the place of supply of such services.
12(11)(d) In other cases The address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services:
12(11)(d) Ist Proviso where the address of the recipient as per the records of the supplier of services is not available location of the supplier of services:
12(12) Banking and other financial services Including Stock broking services Location of the recipient of services on the records of the supplier Location of the supplier of services if the location of the recipient of services is not available
12(13) Insurance services B2B: Location of such Registered Person

B2C: Location of the recipient of services on the records of the supplier

12(14) Advertisement services to

1. The Central Government

2. State Government

3. Statutory Body

4. Local Authority

Meant for the States or Union

territories identified in the contract or agreement

The place of supply shall be taken as being in each of States or Union Territories identified in the contract or agreement.

Value of Supply of Service Attributable to each State or UT

In proportion to the amount attributable to services provided by way of dissemination in the respective States or Union territories as may be determined in terms of the contract or agreement entered into in this regard

In the absence of such contract or agreement, on such other basis as may be prescribed.

(ii) For the rest of the services other than those specified above, a default provision has been provided in section 12(2) of IGST as under:

S.No. Description of supply Place of Supply
1 B2B Location of such Registered Person
2 B2C (i) Location of the recipient where the address on record exists, and

(ii) Location of the supplier of services in other cases

Place of supply of services in case of cross-border supplies:(Section 13)

(Where the location of the supplier of services or the location of the recipient of services is outside India)

(i) In respect of the following categories of services, the place ofsupply is determined with reference to a proxy. Rest of the services are governed by a default provision.

S.No. Nature of Supply Place of Supply
13(3) Services supplied in respect of goods (a) required to be made physically available by the recipient of the service to the supplier of service or any person acting on behalf of supplier of service The location where the services are actually performed,

The location where the goods are situated at the time of supply of service

Hence in such cases place of supply shall be outside India and not the location of goods at the time of supply of service

from a remote location by way of electronic means [First Proviso to S. 13(3)(a)] (Not applicable in case of goods that are temporarily imported into India for repairs and re exported)[2nd Proviso to S. 13(3)(a)]
13(3)(b) Services supplied to an individual, represented as recipient or a person acting on behalf of recipient and requiring the physical presence of the recipient or person acting on behalf of recipient The location where the services are actually performed
13(4) Directly in relation to:1. Immovable Property2. Including Services provided by a)Architectsc) Interior Decoratorsd) Expertse) Estate Agents 3. Services provided by way of grant of right to use immovable property4. Carrying Out of construction Work5. Co-ordination of Construction Work

5. Supply of Accommodation by:

a) Hotel

b) Inn

c) Guest House

d) Club or Campsite, by whatever name called

Location at which the immovable property located or Intended to be located
13(5) Admission or Organization of :

1. Cultural Event

2. Artistic Event

3. Sporting Event

4. Scientific Event

5. Educational Event

6. Entertainment Event

7. Conference

8. Fair

9. Exhibition

10. Celebration or

11. Similar Events

12. Services Ancilliary to Organization or Admission

The place where the event is actually held
13(6) If the three types of services are supplied at more than one locations. i.e.,

(i) Goods & individual related [S. 13(3)]

(ii) Immovable property-related [S. 13(4)]

(iii) Event related [S. 13(5)]

13(6) At more than one location, including a location in the taxable territory Its place of supply shall be the location in the taxable territory where the greatest proportion of the service is provided
13(7) In more than one State or Union Territory Its place of supply shall be taken as being in each state in proportion to the value of services separately collected or determined in terms of contract or agreement entered into in this regard.

In the absence of such contract or agreement, on such other basis as may be prescribed.

13(8)(a) Services provided by banking company or financial institution or NBFC to account holders

“account” means an account bearing interest to the depositor, and includes a non-resident external account and a non-resident ordinary account;

[Hence for current accounts and OD Accounts, location of recipient and not the location of supplier shall be the place of supply]

Location of the supplier of Service
13(8)(b) Intermediary Services

intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account; [S. 2(13)]

Location of the supplier of Service
13(8)(c) Services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month Location of the supplier of Service
13(9) Transportation of goods (other than mail or courier) The place of destination of the goods
13(10) Passenger transportation Place where the passenger embarks on the conveyance for a continuous journey
13(11) Services on-board a Conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board The first scheduled point of departure of that conveyance for the journey
13(12) Online information and database access or retrieval Services

Explanation.––For the purposes of this sub-section, person receiving such services

shall be deemed to be located in the taxable territory, if any two of the following non contradictory conditions are satisfied, namely:––

(a) the location of address presented by the recipient of services through internet is in the taxable territory;

(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;

(c) the billing address of the recipient of services is in the taxable territory;

(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;

(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;

(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory;

(g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory

The location of recipient of service
13(13) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.

(ii) For the rest of the services other than those specified above, a default provision has been provided in Section 13(2) as under:

S.NO. Description of Supply Place of Supply
1. Any Location of the recipient of service

If location of recipient is not available in the ordinary course of business, The location of the supplier of service

Export/Import of services

Exports [S. 2(6)] Imports [S.2(11)]
Means the supply of any service, where:

(a) the supplier of service is located in India,

(b) the recipient of service is located outside India,

(c) the place of supply of service is outside India,

(d) the payment for such service has been received by the supplier of service in convertible foreign exchange, and

(e) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with explanation 1 of section 8

Means the supply of any service, where

(a) the supplier of service is located outside India,

(b) the recipient of service is located in India, and

(c) the place of supply of service is in India

Place of Supply Issues Clarifications

Accommodation Services to SEZ

1. Issue: Whether services of short accommodation, conferencing, banqueting etc provided to SEZ developer/SEZ Unit should be treated as Inter state supply or Intra state supply ?

Clarification:

1.1 As per section 7(5) (b) of the Integrated Goods and Services Tax Act, 2017 (IGST Act in short), the supply of goods or services or both to a SEZ developer or a SEZ unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Whereas, as per section 12(3)(c) of the IGST Act, the place of supply of services by way of accommodation in any immovable property for organizing any functions shall be the location at which the immovable property is located. Thus, in such cases, if the location of the supplier and the place of supply is in the same State/ Union territory, it would be treated as an intra-State supply.

1.2 It is an established principle of interpretation of statutes that in case of an apparent conflict between two provisions, the specific provision shall prevail over the general provision.

1.3 In the instant case, section 7(5)(b) of the IGST Act is a specific provision relating to supplies of goods or services or both made to a SEZ developer or a SEZ unit, which states that such supplies shall be treated as inter-State supplies.

1.4 It is therefore, clarified that services of short term accommodation, conferencing, banqueting etc., provided to a SEZ developer or a SEZ unit shall be treated as an inter-State supply.

[Circular 48/22/2018 dated 14-06-2018]

Place of Supply for IT/IT Enabled Services provided to clients

[Press Release No. 123 dated 12-12-2017]

It was reported in certain sections of the Press that tax officials had raised tax demand in respect of export of IT/IT enabled services provided to clients abroad and that this had been done on the basis of place of supply rules in respect of these services which were apparently provided in India and therefore were liable to be taxed.

In a subsequent development, the Commissioner (Appeals) set aside the orders of the lower adjudicating authority where refund was disallowed and has also upheld the orders where refund had been granted. Thus, the apprehensions expressed in those sections of the Press about the negative effects on the software industry are without basis.

Service Tax Circular 209/1/2018-ST dated 04-05-2018

This circular explains the manner in which the place of provision has to be determined in case of development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software.

Software being intangible, does not have a unique existence and can exist on different servers at the same point in time. The version being customised, adapted, upgraded etc. will only be a copy of the original. Servers themselves are of different types, ranging from file servers (which make files available to workstations on a network), web servers (computer systems that host websites), remote servers (allow users to gain access to files and print services on the Local Area Network from a remote location), proxy servers (an intermediary server between a client application and another server), dedicated servers (single computer in a network reserved for serving the needs of the network) etc. There is also what is called “virtualisation of servers” which refers to the masking of server resources, including the number and identity of individual physical servers, processors and operating systems, from server users. The server administrator uses a software application to divide one physical server into multiple isolated virtual environments. The exact location of the server is neither always known to the service provider nor is its knowledge essential for providing the service. Limited access to the software for a limited period through electronic protocols is given to the service provider by the recipient of service to enable the former to provide the service. Only the recipient of service has control over who accesses the software, when it can be accessed, for how long and for what purpose

Applying the definition of “declared services” in section 66E(d) of the Finance Act, 1994, and the provisions of POPS, to the specific cases of services of development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software, the conclusions which can be drawn are as follows:

a) in the case of services where data, instructions etc. are provided so as to develop software, i.e. development, design and programming of information technology software, the place of provision of service is the location of the recipient of the service.

b) in the case of services on software involving testing, debugging, modification etc. i.e. customisation, adaptation, upgradation, enhancement, implementation of information technology software, the place of provision of service is the location of the recipient of the service.

Therefore, in both the above cases, the place of provision of service is the location of the recipient of the service

Refunds Related Issues in Services

Issue: W hether the benefit of zero rated supply can be allowed to all procurements by a SEZ developer or a SEZ unit such as event management services, hotel and accommodation services, consumables etc?

Clarification:

2.1 As per section 16(1) of the IGST Act, “zero rated supplies” means supplies of goods or services or both to a SEZ developer or a SEZ unit. Whereas, section 16(3) of the IGST Act provides for refund to a registered person making zero rated supplies under bond/LUT or on payment of integrated tax, subject to such conditions, safeguards and procedure as may be prescribed. Further, as per the second proviso to rule 89(1) of the Central Goods and Services Tax Rules, 2017 (CGST Rules in short), in respect of supplies to a SEZ developer or a SEZ unit, the application for refund shall be filed by the:

(a) supplier of goods after such goods have been admitted in full in the SEZ for authorised operations, as endorsed by the specified officer of the Zone;

(b) supplier of services along with such evidences regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone.

2.2 A conjoint reading of the above legal provisions reveals that the supplies to a SEZ developer or a SEZ unit shall be zero rated and the supplier shall be eligible for refund of unutilized input tax credit or integrated tax paid, as the case

[Circular 48/22/2018 dated 14-06-2018]

Issues: Whether independent fabric processors (job workers) in the textile sector supplying job work services are eligible for refund of unutilized input tax credit on account of inverted duty structure under section 54(3) of the CGST Act, 2017, even if the goods (fabrics) supplied are covered under notification No. 5/2017-Central Tax (Rate) dated 28.06.2017?

Clarification

3.1 notification No. 5/2017-Central Tax (Rate) dated 28.06.2017 specifies the goods in respect of which refund of unutilized input tax credit (ITC) on account of inverted duty structure under section 54(3) of the CGST Act shall not be allowed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies of such goods. However, in case of fabric processors, the output supply is the supply of job work services and not of goods (fabrics).

3.2 Hence, it is clarified that the fabric processors shall be eligible for refund of unutilized ITC on account of inverted duty structure under section 54(3) of the CGST Act even if the goods (fabrics) supplied to them are covered under notification No. 5/2017-Central Tax (Rate) dated 28.06.2017

[Circular 48/22/2018 dated 14-06-2018]

Carry forward of Unavailed Cenvat Credit in respect of assignment of right to use any natural resource under GST [Press Release No. 59 dated 12-06-2017

Cenvat Credit Rules, 2004 provide that credit of Service Tax paid in a financial year, on the onetime charges payable in full upfront or in instalments, for the service of assignment of the right to use any natural resource by the Government, local authority or any other person, shall be spread evenly over a period of three years.

Cenvat Credit Rules have been amended vide notification No. 15/2017-Central Excise (N.T.) dated 12.06.2017 so as to provide that Cenvat credit in respect of such services which remains unavailed on the day immediately preceding the appointed day may be availed of in full on that very day. Appointed day means the day when Central GST comes into effect. The amendment would enable service recipients to carry forward such unavailed credit of Service Tax under the GST regime. As a result Telecom Service Providers, who have been allotted Spectrum in auction conducted in 2016 and have already availed one third credit in respect of Service Tax paid by them, during 2016-17, would be eligible to take the remaining two thirds credit pertaining to 2016-17 in the GST regime, scheduled to roll out on 1st July, 2017.

Carry Forward of Input Tax Credit against payment of service tax payment on reverse charge after 30-06-2017 [Circular 207/5/2017-Service Tax dated 28-09-2017 and Press Release No. 103 dated 28-09-2017]

In cases where service was received before 1-7-2017 and payment for the value of the service was also made before 1-7-2017, but the service tax was paid by 5th /6th July 2017, on reverse charge basis, details of credit should be indicated in Part I of Form ST-3 by filing a revised return. In order to give compliant assessees who had filed their ST 3 return by the due date or some days later, an immediate and viable window to file revised returns, all ST3 returns for the period 1-4-2017 to 30-6-2017 which have been filed upto and inclusive of the 31st day of August 2017, shall be deemed to have been filed on 31-8-2017. This will give assesses more time to file revised return. Once details of such credit are reflected in the ST-3, the assessee may proceed to fill in the details in Form GST TRAN-1.

Payment of Service Tax after 30-06-2017 in case of tax evasion [Circular 207/5/2017-Service Tax dated 28-09-2017 and Press Release No. 103 dated 28-09-2017]

In the case of assessees who were not registered under ACES, who want to make payment of service tax on or after 1-7-2017, they may avail of the category of “non assessee registration” in the registration module of ACES.

Time of Supply of Service

The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of section 13 [S.13(1)]

Time of Supply of Service in Case of Forward Charge

If Invoice is issued with time limit prescribed u/s 31(2) [S. 31(2)(a)]

Section 31(2)

A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value,

tax charged thereon and such other particulars as may be prescribed:

Prescribed Time Limits for Issue of Tax Invoice [R.47]

1 General Time Limit 30 days from the date of supply of service
2 Insurer 45 days from the date of supply of service
3 Banking Company 45 days from the date of supply of service
4 Financial Institution including NBFC 45 days from the date of supply of service
5 Making of Taxable Supply between Distinct Persons by;

a) Insurer

b) Banking Company

c) Financial Institution including NBFC

d) Telecom Operator

e) Notified Persons

Option to issue invoice

a) Before Recording Invoice in books

b) At the time of recording invoice in books

c) Before expiry of Quarter during which supply is made

Earlier of :

Date of Issue of Invoice BY SUPPLIER

OR

Date of Receipt of Payment

If Invoice is not issued with in time limit prescribed u/s 31(2) [S. 13(2)(b)] Earlier of

Date of Provision of service

OR

Date of Receipt of Payment

In a case where the provisions of S. 13(2)(a) or S. 13(2)(b) do not apply [S. 13(2)(c)] [ Note: i.e. Cases where supplier does not account for provision of services in his books of accounts and and therefore it is not possible to determine the time of provision of service and has either not received the payment or does not account for payment in his books of accounts. However the recipient reflects the receipt of service in his books of accounts] The date on which the recipient shows the receipt of services in his books of Account
There may be cases where the recipient pays the amount in round figure like while customer is billed for mobile talk time for Rs. 595/-, he may pay Rs 600/-. Thus Rs. 5 is paid in excess. For such excess paid amount if we apply the provisions of Section 13, date of receipt of payment shall be the time of invoice and again separate invoice for Rs. 5/- shall have to be issued. In order to obviate these hardships proviso has been inserted below Section 13(2) as under :

“Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount”

[Proviso to S. 13(2)]

Hence the supplier can reflect excess amount in any subsequent invoice

Explanation.––For the purposes of clauses (a) and (b)––

(i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;

E.g. if invoice is issued for Rs. 50,000/- but amount received is Rs. 100000/-, then supply is deemed to have been made to the extent of Rs. 1,00,000/- inspite of there being supply to the extent of Rs. 50,000/- only.

(ii) “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

Comments : Date of issue of receipt by the supplier may be treated as date on which payment is entered in the books of accounts. Where amount is directly banked before issue of receipt or without receipt , date of credit in the bank account is the date of receipt of payment
Cessation of Supply of Service [S. 31(6)]

In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.

Supply not made [S. 31(3)(e)]

Where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment;

Deficiency in Supply [S. 34(1)]

Where a tax invoice has been issued for supply of any goods or services or

both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.

Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person

Section 31(3)(d): Issue of Receipt of Advance payment

A registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment;

Time of Supply for Continuous Supply of Service

S. 2(33) “continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;

Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––

Section Circumstances Invoice to Be Issued
31(5)(a) Where the due date of payment is ascertainable from the contract on or before the due date of payment
31(5)(b) Where the due date of payment is not ascertainable from the contract before or at the time when the supplier of service receives the payment;
31(5)(c) where the payment is linked to the completion of an event, on or before the date of completion of that event.

Time of Supply of Service in case of Reverse Charge [S. 13(3)]

In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely;-

“reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;

[S. 2(98)]

However 13(3) operates even in situations where recipient is not liable to pay tax on reverse charge basis but still pays tax on reverse charge basis.

(a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

(b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Comments: S.13(3)(b) shall be invoked where recipient does not make payment till 60 days from date of issue of invoice by the supplier. However where services are being received from unregistered supplier, he may not be issuing any proper invoice.

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply

Comments : Whether neither supplier issues invoice not recipient makes any payment and still the receipt of service is recorded in books of accounts, the date of entry in books of accounts is the only practical medium to tax such transaction liable under reverse charge.

Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

“associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961;

Comments: In case of import of service from associate enterprises, where recipient books receipt of service in its books of accounts as and when supplier records the same in his books of accounts, the tax liability is attracted, even if invoice is issued at later point of time

Time of Supply of Service in case of supply of voucher [S. 13(4)]

13(4)(a) If the supply is identifiable at that point The date of issue of voucher
13(4)(b) In all other cases The date of redemption of voucher
“voucher” means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument; [s. 2(118)]

Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4) of section 13 [S. 13(5)]

Time of supply of service is linked u/s 13(2),(3),(4) with

– Issue of Invoice

– Date of receipt of payment

– Provision of service

– Entry in books of accounts

– Issue of Voucher

However in ceratin cases of tax evasion, neither of these may be available to help determination of time of supply. In such a case, if the assesse is registered, then there shall be requirement to file periodical return. In case of unregisterd person, there shall be no requirement to file periodical return but he may be found liable to pay tax on basis of certain evidences. Hence section 13(5) takes care of such situations.

And Hence Time of Supply shall be:

(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or

(b) in any other case, be the date on which the tax is paid.

Time of Supply for Interest, Late Fee or Penalty for Delayed Payment of Consideration [S. 13(6)]

The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

Section 5: Construction Services [Covers Services provided at Sl No.3 of 11/2017-CTR]
Heading 9954: Construction Services
Construction of Complex[Sl. No. 3(i) of NN 11/2017]

Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier

Value of transfer of land deemed at 1/3 rd of total amount

Valuation of Construction of Complex Services[Para 2 of 11/2017-CTR]

In case of supply of service specified in column (3) of the entry at item (i) against serial no. 3 (Construction of Complex Service) of the Table above, involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be.

No refund of Unutilized Credit for Construction of Complex Service [15/2017-CTR]

No refund of unutilised input tax credit shall be allowed under sub-section (3) of section 54 of the said Central Goods and Services Tax Act, in case of supply of services specified in sub-item (b) of item 5 of Schedule II (Construction of Complex) of the Central Goods and Services Tax Act.

Exemption for lease of land for construction of flats etc [Sl No. 16(ii) of 11/2017-CTR –Inserted by 1/2018 dated 25-01-18]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of construction of flats, etc. specified in the entry in column (3), against serial number 3, at item (i) is chargeable to NIL rate

Lease and Sub lease of land not to exceed 1/3rd of total amount

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification i.e. sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be.

Time for liability to pay tax on supply of development rights against consideration in form of construction service [Notification 4/2018-CTR dated 25-01-2018]

Ø Registered persons who supply development rights

Ø to a developer, builder, construction company or any other registered person

Ø against consideration, wholly or partly, in the form of construction service of complex, building or civil structure;

Ø as the registered persons in whose case the liability to pay central tax on supply of the said services, on the consideration received in the form of construction service

Ø shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter).

Time of liability to pay tax on supply of construction service against consideration in the form of development rights[Notification 4/2018-CTR dated 25-01-2018]

Ø Registered persons who supply construction service of complex, building or civil structure

Ø to supplier of development rights

Ø against consideration, wholly or partly, in the form of transfer of development rights

Ø as the registered persons in whose case the liability to pay central tax on supply of the said services, on the consideration received in the form of development rights

Ø shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter).

Reduced Liability of Tax on complex, building, flat etc. under GST [Press Release No. 61 dated 15-06-2017]

The CBEC and States have received several complaints that in view of the works contract service tax rate under GST at 12% in respect of under construction flats, complex etc, the people who have booked flats and made part payment are being asked to make entire payment before 1st July 2017 or to face higher tax incidence for payment made after 1st July 2017. This is against the GST law. The issue is clarified as below:-

1. Construction of flats, complex, buildings will have a lower incidence of GST as compared to a plethora of central and state indirect taxes suffered by them under the existing regime.

2. Central Excise duty is payable on most construction material @12.5%. It is higher in case of cement. In addition, VAT is also payable on construction material @12.5% to 14.5% in most of the States. In addition, construction material also presently suffer Entry Tax levied by the States. Input Tax Credit of the above taxes is not currently allowed for payment of Service Tax. Credit of these taxes is also not available for payment of VAT on construction of flats etc. under composition scheme. Thus, there is cascading of input taxes on constructed flats, etc.

3. As a result, incidence of Central Excise duty, VAT, Entry Tax, etc. on construction material is also currently borne by the builders, which they pass on to the customers as part of the price charged from them. This is not visible to the customer as it forms a part of the cost of the flat.

4. The current headline rate of service tax on construction of flats, residences, offices etc. is 4.5%. Over and above this, VAT @1% under composition scheme is also charged. The buyer only looks at the headline rate of 5.5%. In other cities/states, where VAT is levied under the composition scheme @2% or above, the headline rate visible to the customer is above 6.5%. What the customer does not see is the embedded taxes on account of cascading and sticking of input taxes in the cost of the flat, etc.

5. This will change under GST. Under GST, full input credit would be available for offsetting the headline rate of 12%. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat. The input credits should take care of the headline rate of 12% and it is for this reason that refund of overflow of input tax credits to the builder has been disallowed.

6. The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/ installments. It is, therefore, advised to all builders / construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on instalments to be received after imposition of GST.

7. Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law.

Recommendations made by the GST Council in its 25th Meeting held on 18th January, 2018 at Delhi for the housing sector[Press Release No. 132 dated 18-01-2018]

In the meeting held on 18th January, 2018, the GST Council has made several important recommendations for the housing sector. The recommendations are expected to promote affordable housing for the masses in the country. The recommendations are discussed below.

2. One of the important recommendations is to extend the concessional rate of GST of 12% (effective rate of 8% after deducting one third of the amount charged for the house, flat etc. towards the cost of land or undivided share of land, as the case may be) in housing sector to construction of houses constructed/ acquired under the Credit Linked Subsidy Scheme for

Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri AwasYojana (Urban). Credit Linked Subsidy Scheme is one of the components of Housing for All (Urban) Mission/Pradhan MantriAwasYojana (Urban). Under this component, subsidy would be provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-I/ MIGII) for acquisition, construction of house. Credit linked subsidy would also be available for housing loans availed for new construction and for addition of rooms, kitchen, toilet etc, to existing dwellings as incremental housing. The carpet area of houses constructed under this component of the mission would be upto 30 square meters for EWSA, 60 square meters FOR LIG, 120 sqm for MIG I and 150 sqm for MIG II. The benefit of Credit Linked Subsidy Scheme may be taken by the Economical Weaker sections or Low/Middle Income Groups for purchase of houses under any project. The maximum annual income for eligibility of beneficiaries under the scheme can be upto 18 lakhs. It covers a very large section of population which aspires to own a home.

3. So far, houses acquired under CLSS attracted effective GST rate of 18% (effective GST rate of 12% after deducting value of land). The concessional rate of 12% was applicable only on houses constructed under the other three components of the Housing for All (Urban) Mission/Pradhan Mantri AwasYojana (Urban), namely (i) ln-situ redevelopment of existing slums using land as a resource component; (ii) Affordable Housing in partnership and (iii) Beneficiary led individual house construction / enhancement. The exemption has now been recommended for houses acquired under the CLSS component also. Therefore, the buyers would be entitled to interest subsidy under the scheme as well to a lower concessional rate of GST of 8% (effective rate after deducting value of land).

4. The Council has also recommended that the benefit of concessional rate of GST of 12% (effective GST rate of 8% after deducting value of land) applicable to houses supplied to existing slum dwellers under the in-situ redevelopment of existing slums using land as a resource component of PMAY may be extended to houses purchased by persons other than existing slum dwellers also. This would make the in-situ redevelopment of existing slums using land as a resource component of PMAY more attractive to builders as well as buyers.

5. The third recommendation of the Council is to include houses constructed for “Economically Weaker Section (EWS)” under the Affordable Housing in partnership (PMAY) under the concessional rate of GST of 8% (effective rate after deducting value of land). This will support construction of houses upto 30 sqm carpet area.

6. The fourth recommendation of the Council is to extend the concessional rate of 12% to services by way of construction of low cost houses upto a carpet area of 60 sqm in a housing project which has been given infrastructure status under notification No. 13/06/2009 dated 30th March, 2009. The said notification of Department of Economic Affairs provides infrastructure status to Affordable Housing. Affordable Housing has been defined in the said notification as a housing project using at least 50% of the FAR/FSI for dwelling units with carpet area of not more than 60 sqm. The recommendation of the Council would extend the concessional rate of 8% GST (after deducting value of land) to construction of flats/ houses of less than 60 sqm in projects other than the projects covered by any scheme of the Central or State Government also.

7. In addition to the above, in order to provide a fillip to the housing and construction sector, GST Council has decided to give exemption to leasing of land by government to governmental authority or government entity. [Government entity is defined to mean an authority or board or any other body including a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90% or more participation by way of equity or control, to carry out any function entrusted by the Central Government, State Government, UT or a local authority]. Also, any sale/lease/sub-lease of land as a part of the composite sale of flats has also been exempted from GST. Therefore, in effect, the government does not levy GST on supply of land whether by way of sale or lease or sublease to the buyer of flats and in fact, gives a deduction on account of the value of land included in the value of flats and only the value of flat is subjected to GST.

8. It may be recalled that all inputs used in and capital goods deployed for construction of flats, houses, etc attract GST of 18% or 28%. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting value of land).

As a result, the builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats.

9. The builders/developers are expected to follow the principles laid down under section 171 of the GST Act scrupulously.

10. The above changes shall come into force with effect from 25 January 2018.

18%
General Works Contract of Immovable Property [Sl No. 3(ii) of NN 11/2017]

Composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017

As per “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract [S.2(119)]

18%
Specified Works Contract Service to Government and Gov. Auth. [Sl No. 3(iii) of Not. 11/2017 Inserted by Not. 20/2017 dated 22-08-17]

Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority [Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity (Substituted by 31/2017-CTR w.e.f. 13-10-17) ] by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, – [Note: Building, fabrication , Modification, Improvement is not covered]

(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(b) canal, dam or other irrigation works;

(c) pipeline, conduit or plant for

(i) water supply

(ii) water treatment, or

(iii) sewerage treatment or disposal.

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be”; (Added by 31/2017-CTR w.e.f. 13-10-17)

Para 4(ix) of 11/2017-CTRGovernmental Authority” means an authority or a board or any other body, –

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government,

with 90 per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution.

Para 4(x) of 11/2017-CTRGovernment Entity” means an authority or a board or any other body including a society, trust, corporation,

i) set up by an Act of Parliament or State Legislature; or

ii) established by any Government,

with 90per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority

12% w.e.f. 22/08/2017. (From 01/07/2017 to 21/08/2017 It is taxable @ 18%)
Works Contracts for Certain Public Utility Infrastructure[Sl No. 3(iv) of Notification No. 11/2017 Inserted by Not. 20/2017 dated 22-08-17]

Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;

(b) a civil structure or any other original works pertaining to a scheme stunder Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation redevelopment of existing slums dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; [Changes made in this entry vide Para (i)(a)(A)(I) of Notification 1/2018-CTR dated 25-01-2018]

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

For (b),(c),(d) above cost of land to be taken at 1/3rd of the value. [Notification 31/2017 dated 13-10-2017]

(da) Inserted by Para (i)(a)(A)(II) of Notification 1/2018-CTR dated 25-01-18

a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);

(db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’;

Exemption for lease of land for works contract service at sub item (b), (c), (d), (da) and (db) of 3(iv) [Sl No. 16(ii) of 11/2017-CTR –Inserted by 1/2018 dated 25-01-18]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of :

“……………..

(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation redevelopment of existing slums dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);

(db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’;

Is NIL Rated

Lease and Sub lease of land not to exceed 1/3rd of total amount

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification

Value of transfer of land deemed at 1/3 rd of total amount [Para 2 of 11/2017 Inserted by 1/2018-CTR dated 25-01-2017]

Valuation of supply of service specified involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be.

(e) a pollution control or effluent treatment plant, except located as a part of a factory; or

(f) a structure meant for funeral, burial or cremation of deceased.

Inserted by Notification 1/2018-CTR dated 25-01-2018

“(g) a building owned by an entity registered under section 12AA of the Income Tax Act, 1961 (43 of 1961), which is used for carrying out the activities of providing, centralised cooking or distribution, for mid-day meals under the mid-day meal scheme sponsored by the Central Government, State Government, Union territory or local authorities

12% w.e.f. 22/08/2017. (From 01/07/2017 to 21/08/2017 It is taxable @ 18%)
Works Contract for Railways, Housing, Agri Storage and Mechanized Handling [Sl No. 3(v) of Not. 11/2017 Inserted by Not. 20/2017 dated 22-08-17]

Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- [Note : Repair, Alteration. Modification, Renovation, Completion, fitting out not covered by Concessional taxation]

(a) railways, excluding including monorail and metro; [“Including” substituted for excluding vide Notification 1/2018-CTR dated 25-01-2018]

(b) a single residential unit otherwise than as a part of a residential complex;

Single residential unit” means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family [Para 2 (zze) of 12/2017-CTR

“residential complex” means any complex comprising of a building or buildings, having more than one single residential unit; [Para 2 (zzb)

[Note:

1. Construction for Residential Complex is taxable @ 18%.

Exemption:

2. Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex is exempt as per Sl. No.11 of Exemption Notification 12/2017]

3. Para 2(zs) of 12/2017

“original works” means- all new constructions;

(i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

(ii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;

4. Hence Pure labor contracts of following nature for erection, commission or installation in single residential unit should be exempt:

a) Air Conditioning

b) Security Systems

c) Electrical Installations

d) Sanitary Installation

(c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under-

(1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(2) any housing scheme of a State Government

For (b),(c),(d) above cost of land to be taken at 1/3rd of the value. [Not. 31/2017 dated 13-10-2017]

Inserted by Notification 1/2018-CTR dated 25-01-2018

“(da) low-cost houses up to a carpet area of 60 square meters per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017

(e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

(f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.

Exemption: As per item no. 10 of Exemption Notification 12/2017 , Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana is exempt

Exemption for lease of land for works contract service at sub item (b), (c), (d), (da) of 3(v) [Sl No. 16(ii) of 11/2017-CTR –Inserted by 1/2018 dated 25-01-18]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to:

(b) a single residential unit otherwise than as a part of a residential complex;

(c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under-

(1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(2) any housing scheme of a State Government

“(da) low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017

Is NIL Rated

Lease and Sub lease of land not to exceed 1/3rd of total amount

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification

Exemption for lease of land for works contract service at sub item (b), (c), (d), (da) and (db) of 3(iv) [Sl No. 16(ii) of 11/2017-CTR –Inserted by 1/2018-CTR dated 25-01-2018]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of :

“……………..

(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation redevelopment of existing slums dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);

(db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’;

Is NIL Rated

Lease and Sub lease of land not to exceed 1/3rd of total amount

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification

Value of transfer of land deemed at 1/3 rd of total amount [Para 2 of 11/2017 Inserted by 1/2018-CTR dated 25-01-2017]

Valuation of supply of service specified involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be.

12%
Works Contract Service to Gov/Gov Authority for Structures not meant for business [Sl. No. 3(vi)to Not. 11/2017 added by Not.24/2017-CTR dated 21-09-17]

Services provided Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided [Substituted by 46/2017 dated 14-11-2017] to the Central Government, State Government, Union Territory, a local authority or a governmental authority [(a local authority, a Governmental Authority or a Government Entity (Added by 31/2017-CTR w.e.f. 13-10-17)]by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

The term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities [Clarificatory notification 17/2018-CTR dated 26-7-18 issued u/s 11(3). However as per section 11(3), clarificatory notification has to be issued with in 1 year.

(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or

(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.

For (c) above cost of land to be taken at 1/3rd of the value. [Not. 31/2017 dated 13-10-2017]

Exemption for lease of land for works contract service at sub item (c) of 3(vi) [Sl No. 16(ii) of 11/2017-CTR –Inserted by 1/2018 dated 25-01-18]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017 is NIL Rated

Lease and Sub lease of land not to exceed 1/3rd of total amount

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification

Exemption for lease of land for works contract service at sub item (b), (c), (d), (da) and (db) of 3(iv) [Sl No. 16(ii) of 11/2017-CTR –Inserted by 1/2018 dated 25-01-18]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of :

“……………..

(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation redevelopment of existing slums dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);

(db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’;

Is NIL Rated

Lease and Sub lease of land not to exceed 1/3rd of total amount

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification

Value of transfer of land deemed at 1/3 rd of total amount [Para 2 of 11/2017 Inserted by 1/2018-CTR dated 25-01-2017]

Valuation of supply of service specified involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be.

Condition of service to Government Entity

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be;

(Added by 31/2017-CTR w.e.f. 13-10-17)

12% (w.e.f. 21-09-2017)
Predominantly Earth Work Contract service to Government/Government Entities (Added by 31/2017-CTR w.e.f. 13-10-17)

(vii)Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75 per cent. of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity.

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be

5%
Off Shore Works Contract for oil and gas exploration

(viii)Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services, in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles from the nearest point of the appropriate base line.

12%
Services by sub contractor to Contractor providing specified services [Sl No. 8(ix) inserted by 1/2018-CTR dated 25-01-18]

Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity

Works Contract Services Specified in 3(iii)

(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(b) canal, dam or other irrigation works;

(c) pipeline, conduit or plant for

(i) water supply

(ii) water treatment, or

(iii) sewerage treatment or disposal.

Works Contract Services specified in 3(vi)

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

(b)

The term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities [Clarificatory notification 17/2018-CTR dated 26-7-18 issued u/s 11(3). However as per section 11(3), clarificatory notification has to be issued with in 1 year.

(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or

(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.

Condition for services to Government Entity

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

12%
Services by sub contractor to Contractor providing specified services [Sl No. 8(x) inserted by 1/2018-CTR dated 25-01-18]

Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity

Works Contract service specified in 3(vii)

Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75 per cent. of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity.

Condition for services to Government Entity

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

5%
Housekeeping Services provided through E –Commerce operator[Sl No. 8(xi) inserted by 1/2018-CTR dated 25-01-18]

Services by way of housekeeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under subsection (1) of section 22 of the Central Goods and Services Tax Act, 2017.

Tax Payable by E-Commerce Operator

On these service tax is payable by E-Commerce operator u/s 9(5) through whom these services are provided [Notification 23/2017-CTR dated 22-8-17]

5%
Construction services other than covered above. [Sl No. 3(xii) of 11/2017-CTR]

Comments: The term construction service is not defined under law. This clause covers construction services other than:

a) Construction of Complex, Building or other civil structure

b) Works Contract for Construction of Immovable Property where in transfer of property in goods is involved

c) Works Contract to Government for Construction of Public Uilities where in transfer of property in goods is involved

d) Sub Contractor services to contractor providing specified services

Hence purely labor Contracts for Construction of Immovable Property shall get covered here because in such contracts transfer of property in goods is not involved.

Construction service for Air port, port, monorail and metro shall be taxed @ 18%

Housekeeping service not provided through E commerce operator shall be taxable @ 18%.

Sub Contractor providing services to contractor engaged in non specified services [Other than 3(iii),(vi), (vii)] shall also attract 18% tax

18%
Heading 9987

Maintenance, repair and installation (except construction) services.

18%
Exemption for Construction Services

Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex is exempt as per Sl. No. No. 11 of Exemption Notification 12/2017]

Para 2(zs) of 12/2017

“original works” means- all new constructions;

(iii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

(iv) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;

Hence Pure labor contracts of following nature for erection, commission or installation in single residential unit should be exempt:

e) Air Conditioning

f) Security Systems

g) Electrical Installations

h) Sanitary Installation

Exemption under Construction Services

Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to

Ø the Central Government,

Ø State Government or

Ø Union territory or

Ø local authority or a

Ø Governmental authority or

Ø Government Entity [Notification 2/2018-CTR dtd 25-1-18]

by way of any activity

Ø in relation to any function entrusted to a Panchayat under article 243G of the Constitution or

Ø in relation to any function entrusted to a Municipality under article 243W of the Constitution.

Are exempt under Sl No. 3 of Notification 12/2017-CTR]

Hence only pure labor contracts are exempt under Entry 3 of 12/2017

Services up to 75% of Value of Composite Supply

Ø Composite supply of goods and services

Ø in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply

Ø provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity

Ø in relation to any function entrusted to a Panchayat under article 243G of the Constitution

Ø or in relation to any function entrusted to a Municipality under article 243W of the Constitution

[Inserted by Notification 2/2018-CTR dated 25-01-18]

Activities Covered in Article 243G (11th Schedule)of the Constitution

1. Agriculture, including agricultural extension. 2. Land improvement, implementation of land reforms, land consolidation and soil conservation. 3. Minor irrigation, water management and watershed development. 4. Animal husbandry, dairying and poultry. 5. Fisheries. 6. Social forestry and farm forestry. 7. Minor forest produce. 8. Small scale industries, including food processing industries. 9. Khadi, village and cottage industries. 10. Rural housing. 11. Drinking water. 12. Fuel and fodder. 13. Roads, culverts, bridges, ferries, waterways and other means of communication. 14. Rural electrification, including distribution of electricity. 15. Non-conventional energy sources. 16. Poverty alleviation programme. 17. Education, including primary and secondary schools. 18. Technical training and vocational education. 19. Adult and non-formal education. 20. Libraries. 21. Cultural activities. 22. Markets and fairs. 23. Health and sanitation, including hospitals, primary health centres and dispensaries. 24. Family welfare. 25. Women and child development. 26. Social welfare, including welfare of the handicapped and mentally retarded. 27. Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. 28. Public distribution system. 29. Maintenance of community assets.

Activities covered by 243W (12th Schedule) Constitution of India

1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. 10. Slum improvement and upgradation. 11. Urban poverty alleviation. 12. Provision of urban amenities and facilities such as parks, gardens, playgrounds. 13. Promotion of cultural, educational and aesthetic aspects. 14. Burials and burial grounds; cremations, cremation grounds; and electric crematoriums. 15. Cattle pounds; prevention of cruelty to animals. 16. Vital statistics including registration of births and deaths. 17. Public amenities including street lighting, parking lots, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries.

Exemption for Pure labor Service under Housing Projects of Housing for All or PM Awas Yojna [Sl No. 10 of 12/2017-CTR]

Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana

Exemption for laying infrastructure for extending electricity to tube well for agricultural use [Sl No. 10A inserted by 14/2018-CTR dated 26-07-18]

Ø Services supplied by electricity distribution utilities

Ø by way of construction, erection, commissioning, or installation of

Ø infrastructure for extending electricity distribution network

Ø upto the tube well of the farmer or agriculturalist

Ø for agricultural use

Section 6: Distributive Trade Services; Accommodation, Food and Beverage Service; Transport Services; Gas and Electricity Distribution Services [Covers Services at Sl No. 4 to 13 of N/N 11/2017-CTR]

Covers:

Heading 9961:Services in wholesale trade
Heading 9962: Services in retail trade.
Heading 9963:Accommodation, food and beverage services
Heading 9964:Passenger transport services
Heading 9965:Goods transport services
Heading 9966: Rental services of transport vehicles
Heading 9967: Supporting services in transport
Heading 9968 :Postal and courier services.
Heading 9969 :Electricity, gas, water and other distribution services.
Heading 9961:Services in wholesale trade.

Explanation-This service does not include sale or purchase of goods but includes:

– Services of commission agents, commodity brokers, and auctioneers and all other traders who negotiate whole sale commercial transactions between buyers and sellers, for a fee or commission’

– Services of electronic whole sale agents and brokers,

– Services of whole sale auctioning houses.

18%
Heading 9962: Services in retail trade.

Explanation– This service does not include sale or purchase of goods

18%
Exemption for service provided by Fair Price Shop under PDS

[Notification 21/2017-CTR dated 22-8-17]

Service provided by Fair Price Shops to Central Government by way of sale of wheat, rice and coarse grains under Public Distribution System(PDS) against consideration in the form of commission or margin.

Service provided by Fair Price Shops to State Governments or Union territories by way of sale of kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin.

Service provided by Fair Price Shops to Central Government, State Government or Union territory by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against consideration in the form of commission or margin

[Notification 47/2017 dated 14-11-2017 substituting S.No. 11A of 12/2017]

Heading 9963:Accommodation, food and beverage services
Food and Beverages where accommodation lesser than 7500/- per unit[Sl No. 7(i) of 11/2017-CTR]

Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied,

other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent.

Explanation 1.- This item includes such supply at a canteen, mess, cafeteria or dining space of an institution such as a school, college, hospital, industrial unit, office, by such institution or by any other person based on a contractual arrangement with such institution for such supply, provided that such supply is not event based or occasional

Explanation 2.- This item excludes the supplies covered under item 7 (v).[i.e. Outdoor Catering]

Explanation 3.- “declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit

[Changes made by 13/2018 dated 26-07-2018]

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken

[Notification 46/2017 dated 14-11-17]

Non AC non Liquor Restaurants [S.No. 7(i)of NN 11/2017]

Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, neither having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year nor having licence or permit or by whatever name called to serve alcoholic liquor for human consumption

GST on College Hostel Mess Fees [Circular 28/2018 dated 08-01-2018]

The educational institutions have mess facility for providing food to their students and staff. Such facility is either run by the institution/ students themselves or is outsourced to a third person. Supply of food or drink provided by a mess or canteen is taxable at 5% without Input Tax Credit [Serial No. 7(i) of notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017 refers]. It is immaterial whether the service is provided by the educational institution itself or the institution outsources the activity to an outside contractor.

Corrigendum to Circular No. 28/02/2018-GST dated 08th January 2018 dated 18-01-2018

2.1 If the catering services is one of the services provided by an educational institution to its students, faculty and staff and the said educational institution is covered by the definition given under para 2(y) of notification No. 12/2017-Central Tax (Rate), then the same is exempt. [Sl. No. 66(a) of notification No. 12/2017-Central Tax (Rate) refers]

2.2 If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than the educational institution, then it is a supply of service at entry 7(i) of notification No. 11/2017-CT (Rate) [as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017] to the concerned educational institution and attracts GST of 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken, effective from 15.11.2017.”

Withdrawl of Circular No. 28/2018, Corrigendum [Circular No. 50/2018 dtd 31-07-2018

Consequent to the decisions of 28th GST Council Meeting held on 21.07.2018, the contents of the Circular No. 28/02/2018-GST dated 08.01.2018 as amended vide Corrigendum dated 18.01.2018 have been incorporated in Sl. No. 7 (i) of the Notification No. 13/2018-Central Tax(Rate), dated 26.07.2018 amending the Notification No. 11/2017- Central Tax (Rate) dated 28th June 2017.

Hence, Circular No. 28/02/2018-GST, dated 08.01.2018 as amended vide Corrigendum dated 18.01.2018 is withdrawn w.e.f 27.07.2018

5%
Supply of food by Railways or IRCTC or licensees [Sl No. 7(ia) inserted by 13/2018-CTR dated 26-07-2018]

Supply, of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken

GST on providing catering services in train [Order No. 2/2018 dated 31-03-2018]

Different GST rates are being applied for mobile and static catering in Indian Railways which is presently leading to a situation whereby the same licensee (selected by Indian Railways/IRCTC) supplying the same food would be subjected to different GST rates depending on whether it is mobile or static catering, as also which variant of mobile catering it is [pre-paid (without option), pre-paid (with option) or post-paid]. The rate difference is resulting in the same food being supplied at two different rates to the railway passengers, which is anomalous.

The passenger is not aware as to the GST rate applicable to the food ordered by him/her. This may also lead to unnecessary litigation and thus further strengthens the need for uniform application of tax rate in respect of food and drinks in/by Railways.

With a view to remove any doubt or uncertainty in the matter and bring uniformity in the rate of GST applicable for all kinds of supply of food and drinks made available in trains, platforms or stations, it is clarified with the approval of GST Implementation Committee, that the GST rate on supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without ITC.

Withdrawl of Order No. 2/2018 [Circular No. 50/2018 dtd 31-07-2018]

The contents of the Order No 02/2018-Central Tax dated 31.03.2018 have been incorporated in Sl. No. 7(ia) of the Notification No. 13/2018-Central Tax(Rate), dated 26.07.2018 amending the Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017.

Hence 32Order No 02/2018-Central Tax dated 31.03.2018 is withdrawn w.e.f 27.07.2018.

5%
Food and Beverages where accommodation => 7500/- per unit

Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink,where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent.

Restaurant having permit/licesnse to serve liquor[S.No. 7(iii) of NN 11/2017]

Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, having licence or permit or by whatever name called to serve alcoholic liquor for human consumption

18%
Restaurants having AC facility [S.No. 7(iv) of NN 11/2017]

Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year

Outdoor catering [S.No. 7(v) of NN 11/2017]

Ø Supply,

Ø by way of or as part of any service or in any other manner whatsoever

Ø Of goods, being food or any other article for human consumption or any drink,

Ø at Exhibition Halls, Events, Conferences, Marriage Halls and other outdoor or indoor functions

Ø that are event based and occasional in nature.

Ø in outdoor catering

Ø wherein goods, being food or any other article for human consumption or any drink

Ø (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering

and such supply or service is for cash, deferred payment or other valuable consideration

[Changes made by 13/2018-CTR dated 26-07-2018]

18%
Food along with Renting of Premises [Sl. No. 7(vii) of 11/2017-CTR]

Ø Supply,

Ø by way of or as part of any service or in any other manner whatsoever,

Ø of goods,

Ø including but not limited to food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption),

Ø where such supply or service is for cash, deferred payment or other valuable consideration,

Ø in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function)

Ø together with renting of such premises.

18%
Hotel with declared tariff value of supply => Rs. 1000/- per day but <Rs. 2500 [Sl No. 7(ii) of 11/2017]

Ø Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places

Ø meant for residential or lodging purposes

Ø having declared tariff value of supply [13/2018-CTR DTD 26-7-18] of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees per unit per day or equivalent.

Explanation :“declared tariff” includes

Ø charges for all amenities provided in the unit of accommodation (given on rent for stay)

Ø like furniture, air conditioner, refrigerators or any other amenities,

Ø but without excluding any discount offered on the published charges for such unit.

Comments: In other amenities food can not be included because then tax rate shall be 18% being bundled service for Renting of premises along with food

12%
Hotel with declared tariff value of supply => Rs. 2500/- per day but <Rs. 7500 [Sl. No. 7(vi) of 11/2017-CTR]

Ø Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places

Ø meant for residential or lodging purposes

Ø having declared tariff value of supply [13/2018-CTR DTD 26-7-18] of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees per unit per day or equivalent.

18%
Hotel with declared tariff value of supply => Rs. 7500/- per day [Sl.No. 7(viii) of NN 11/2017]

Ø Accommodation in hotels including five star hotels, inns, guest houses, clubs, campsites or other commercial places

Ø meant for residential or lodging purposes

Ø having declared tariff value of supply [13/2018-CTR DTD 26-7-18] of a unit of accommodation of seven thousand and five hundred rupees and above per unit per day or equivalent.

Clarification on GST rates on hotel accommodation Press Release No. 83 dated 18-10-17

Reports have been received expressing doubts whether 5-star hotels are liable to pay GST @ 28% irrespective of the declared tariff of a unit of accommodation.

In this context, it is hereby clarified that accommodation in any hotel, including 5-star hotels having declared tariff of a unit of accommodation of less than INR 7500 per unit per day, will attract GST @ 18%. Star rating of hotels is, therefore, irrelevant for determining the applicable rate of GST.

28%
Clarification on Declared Tariff [Circular 27/2018 dated 4-1-18]

1. Declared or published tariff is relevant only for determination of the tax rate slab. GST will be payable on the actual amount charged (transaction value).

2. GST rate would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the entire amount charged from the customer. For example, if the declared tariff is Rs. 7000 per unit per day but the amount charged from the customer on account of extra bed is Rs. 8000, GST shall be charged at 18% on Rs. 8000.

3. Tariff declared anywhere, say on the websites through which business is being procured or printed on tariff card or displayed at the reception will be the declared tariff. In case different tariff is declared at different places, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST.

4. In case different tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service of accommodation is provided shall apply.

5. Declared tariff at the time of supply would apply.

6. If declared tariff of the accommodation provided by way of upgrade is Rs10000, but amount charged is Rs 7000, then GST would be levied @ 28% on Rs 7000/-.

7. Declared Tariff does not include taxes

Accommodation, food and beverage services other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) [Sl. No. 7(ix) of NN 11/2017] 18%
Exempt Accommodation Services

1. Services by way of renting of residential dwelling for use as residence. [sl No. 12 of 12/2012]

2. Services by a person by way of (b) renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) or a trust or an institution registered under sub clause (v) of clause (23C) of section 10 of the Income-tax Act or a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act:

Provided that nothing contained in entry (b) of this exemption shall apply to,-

(i) renting of rooms where charges are one thousand rupees or more per day;

(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;

(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

[Sl. No. 13(b) of 12/2017-CTR]

general public” means the body of people at large sufficiently defined by some common quality of public or impersonal nature [Para 2(zc) of 12/2017-CTR]

3. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff value of supply [Substituted by 14/2018-CTR dated 26-7-18] of a unit of accommodation below one thousand rupees per day or equivalent. [Sl No. 14 of 12/2017-CTR]

Circular 32/2018 dated 12-02-2018

Issue: Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No. 12/2017-CT (Rate).

Clarification: Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-CT(Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [Sl. No. 14 of notification No. 12/2017-CT(Rate) refers]

NIL
Issue related to taxability of ‘tenancy rights’ under GST [Circular No. 44/18/2018 dated 02-05-2018]

Doubts have been raised as to,-

(i) Whether transfer of tenancy rights to an incoming tenant, consideration for which is in form of tenancy premium, shall attract GST when stamp duty and registration charges is levied on the said premium, if yes what would be the applicable rate?

(ii) Further, in case of transfer of tenancy rights, a part of the consideration for such transfer accrues to the outgoing tenant, whether such supplies will also attract GST?

The transfer of tenancy rights against tenancy premium which is also known as “pagadi system” is prevalent in some States. In this system the tenant acquires, tenancy rights in the property against payment of tenancy premium(pagadi). The landlord may be owner of the property but the possession of the same lies with the tenant. The tenant pays periodic rent to the landlord as long as he occupies the property. The tenant also usually has the option to sell the tenancy right of the said property and in such a case has to share a percentage of the proceed with owner of land, as laid down in their tenancy agreement. Alternatively, the landlord pays to tenant the prevailing tenancy premium to get the property vacated. Such properties in Maharashtra are governed by Maharashtra Rent Control Act, 1999.

As per section 9(1) of the CGST Act there shall be levied central tax on the intra-State supplies of services. The scope of supply includes all forms of supply of goods and services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business and also includes the activities specified in Schedule II. The activity of transfer of tenancy right against consideration in the form of tenancy premium is a supply of service liable to GST. It is a form of lease or renting of property and such activity is specifically declared to be a service in para 2 of Schedule II i.e. any lease, tenancy, easement, licence to occupy land is a supply of services

The contention that stamp duty and registration charges is levied on such transfers of tenancy rights, and such transaction thus should not be subjected to GST, is not relevant. Merely because a transaction or a supply involves execution of documents which may require registration and payment of registration fee and stamp duty, would not preclude them from the scope of supply of goods and services and from payment of GST. The transfer of tenancy rights cannot be treated as sale of land or building declared as neither a supply of goods nor of services in para 5 of Schedule III to CGST Act, 2017. Thus a consideration for the said activity shall attract levy of GST.

To sum up, the activity of transfer of ‘tenancy rights’ is squarely covered under the scope of supply and taxable per-se. Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is taxable. However, renting of residential dwelling for use as a residence is exempt[Sl. No. 12 of notification No. 12/2017-Central Tax(Rate)]. Hence, grant of tenancy rights in a residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt. As regards services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium is liable to GST.

Tax on services provided through E-Commerce operator [S.9(5)]

[Notification 17/2017-CTR dated 28-6-17]

For Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act, provided through E-Commerce operator, tax shall be paid by E-Commerce operator

Homestays through E Commerce operator [Circular No. 27/2018 dated 04-01-2018]

Whether homestays providing accommodation through an Electronic Commerce Operator, below threshold limit are exempt from taking registration?

Notification No. 17/2017-Central Tax (Rate), has been issued making ECOs liable for payment of GST in case of accommodation services provided in hotels, inns guest houses or other commercial places meant for residential or lodging purposes provided by a person having turnover below Rs. 20 lakhs (Rs. 10 lakhs in special category states) per annum and thus not required to take registration under section 22(1) of CGST Act. Such persons, even though they provide services through ECO, are not required to take registration in view of section 24(ix) of CGST Act, 2017.

Composition Scheme for Bakery

What will be the rate of tax for bakery items supplied where eating place is attached – manufacturer for the purpose of composition levy?

Any service by way of serving of food or drinks including by a bakery qualifies under section 10 (1) (b) of CGST Act and hence GST rate of composition levy for the same would be 5%.

[Circular 27/2018 dated 04-01-2018]

Passenger transport services [Heading 9964]
Travel By Rail [Sl No. 8(i) of 11/2017-CTR]

Ø Transport of passengers,

Ø with or without accompanied belongings,

Ø by rail

Ø in first class or air conditioned coach

Concessional Rate of 5% is subject to condition that

Ø credit of input tax charged

Ø in respect of goods used in supplying the service

Ø is not utilised for paying central tax or integrated tax on the supply of the service

5%
Exemption on Travel by Rail

As per Sl No. 17 of 12/2017-CTR, Service of transportation of passengers, with or without accompanied belongings, by—

(a) railways in a class other than—

(i) first class; or (ii) an air-conditioned coach;

(b) metro, monorail or tramway;

Is NIL rated

Hence travel in AC coach of metro, monorail or tramway is also exempt

NIL
Travel by Air
Economy Class[ Sl No. 8(iii) of 11/2017-CTR]

Ø Transport of passengers,

Ø with or without accompanied belongings,

Ø by air

Ø in economy class

Is taxable @ 5%

Subject to Condition that credit of input tax charged on goods used in supplying the service has not been taken

As per Explanation 4(iv) to NN 11/2017,

Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,-

(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and

(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.

Although Condition to 8(iii) requires reference to Explanation (iv) but explanation (iv) deals with “goods and services” and not stand alone “goods “ as referred in condition stated above.

GST leviable on inter-state transfer of aircraft engines, parts and accessories for use by their own airlines [Circular 16/2017 dated 15-11-2017]

Credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST on inter–state supply of such aircraft engines, parts & accessories by way of inter-state stock transfers between distinct persons as specified in section 25 of the CGST Act, notwithstanding that credit of input tax charged on consumption of such goods is not allowed for supply of service of transport of passengers by air in economy class at GST rate of 5%.

5%
Embarking or Terminating in RCS Airport [ Sl No. 8(iv) of 11/2017-CTR]

Ø Transport of passengers,

Ø with or without accompanied belongings,

Ø by air,

Ø embarking from or terminating in a Regional Connectivity Scheme Airport,

Ø as notified by the Ministry of Civil Aviation.

Condition: Subject to Condition that credit of input tax charged on goods used in supplying the service has not been taken

As per Explanation 4(iv) to NN 11/2017:

Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,-

(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and

(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.

5%
Executive Class [Sl No. 8(v) of 11/2017-CTR]

Ø Transport of passengers by air,

Ø with or without accompanied belongings,

Ø in other than economy class

Note : There is no condition for not availing the ITC

12%
Exemption on Travel by Air

1. As per Sl No. 15(i) of 12/2017-CTR, Transport of passengers, with or without accompanied belongings, by – (a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal is NIL rated.

2. As per Sl No. 16 of 12/2017-CTR, Services provided to the Central Government, by way of transport of passengers with or without accompanied belongings, by air, embarking from or terminating at a regional connectivity scheme airport, against consideration in the form of viability gap funding is Nil rated.

Provided that nothing contained in this entry shall apply on or after the expiry of a period of one year three years (substituted by 2/2018-CTR dated 25-01-18]from the date of commencement of operations of the regional connectivity scheme airport as notified by the Ministry of Civil Aviation.

NIL
Leasing of Air craft for Air Transport [Sl No. 15(iv) and 17(v) of 11/2017-CTR]

Leasing of aircrafts by an operator for operating scheduled air transport service or scheduled air cargo service by way of transaction covered by clause (f) paragraph 5 of Schedule II of the Central Goods and Services Act, 2017 i.e. transfer of right to use subject to condition that credit of input tax charged on goods used in supplying the service has not been taken

(a) “operator” means a person, organization or enterprise engaged in or offering to engage in aircraft operations;

(b) “scheduled air transport service” means an air transport service undertaken between the same two or more places operated according to a published time table or with flights so regular or frequent that they constitute a recognisable systematic series, each flight being open to use by members of the public;

(c) “scheduled air cargo service” means air transportation of cargo or mail on a scheduled basis according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, not open to use by passengers.

As per Explanation 4(iv) to NN 11/2017:

Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,-

(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and

(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.

5%
GST on Passenger Transportation by Road [Sl No. 8(ii)/8(vi)/8(vii)]
Travel by Stage /Contract Carriage/Motor Cab/Radio Taxi

Meaning of Stage Carriage

As per Para 2(zzh) of NN 12/2017-CTR, (zzh) “stage carriage” shall have the same meaning as assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988); i.e.

Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey

[It means stage carriage refers to motor vehicle constructed or adapted to carry more than 6+driver=7 passenger i.e. 8 or more seats]

Meaning of Contract Carriage

As per Para 2(t) of NN 12/2017-CTR (t) “contract carriage” has the same meaning as assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988)

“contract carriage” means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum –

(a) on a time basis, whether or not with reference to any route or distance; or

(b) from one point to another,

and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey,

and includes – (i) a maxicab; and (ii) a motorcab notwithstanding that separate fares are charged for its passengers;

Difference between Stage Carriage and Contract Carriage

Bhim Singh vs State Of Uttarakhand & Others on 24 February, 2014]

• Difference between the stage carriage and the contract carriage, as per the Motor Vehicles Act, is that a stage carriage permit holder picks passengers from one point and there can be various stages till the final destination point which are various stages, that is why its is called a ‘stage carriage’. On the other hand, a contract carriage permit holder runs from one point to the destination point only.

Meaning of Motor Cab

Motor Cab is defined as any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward,

Meaning of Maxi cab

• As per section 2(22) of Motor Vehicle Act 1988, “maxicab” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward

[Hence maxi cab shall have 8 to 13 seats including driver ]

Meaning of Radio Taxi

• As per Para 2(zv) of 12/2017-CTR, “radio taxi” means a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using the Global Positioning System (GPS) or General Packet Radio Service(GPRS)

Travel by Stage /Contract Carriage/Radio Taxi[Sl No. 8(ii) of NN 11/2017-CTR]
Air Conditioned Contract Carriage [Sl No. 8(ii)(a) of 11/2017-CTR]

Transport of passengers, with or without accompanied belongings by-

air conditioned contract carriage other than motorcab; [Maxi cab not excluded],

Provided that credit of input tax charged on goods or and services used in supplying the service has not been taken [“or” substituted by “and” vide Notification 31/2017 dated 13-10-17]

Comments : Since goods include both capital goods as well as inputs, the application of rate of 5% shall result in denial of credit on inputs, capital goods as well as input services

5%
Exemption from Travel by Contract Carriage:

As per Sl No. 15(b) of NN 12/2017, Transport of passengers, with or without accompanied belongings by non-airconditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire is NIL Rated

Air Conditioned Stage Carriage[Sl No. 8(ii)(b) of 11/2017-CTR]

Transport of passengers, with or without accompanied belongings by-air conditioned stage carriage;

Provided that credit of input tax charged on goods or and services used in supplying the service has not been taken

Comments : Since goods include both capital goods as well as inputs, the application of rate of 5% shall result in denial of credit on inputs, capital goods as well as input services

5%
Exemption for Stage Carriage:

1. As per Sl No. 15(c) of NN 12/2017, stage carriage other than air conditioned stage carriage is exempted.

2. As per Sl No. 22 of NN 12/2017 Services by way of giving on hire to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers is exempt.

Comments:

But providing motor vehicle to private transport undertaking for carrying passengers shall not be exempt.

NIL
Radio Taxi [Sl No. 8(ii)(c) of 11/2017-CTR]

Transport of passengers, with or without accompanied belongings by radio taxi

Provided that credit of input tax charged on goods or and services used in supplying the service has not been taken

[Comments: Non AC radio taxi is also taxable]

5%
Travel by Motor Vehicle [Sl No. 8(vi) of NN 11/2017-CTR]
Transportation by any motor vehicle Motor Cab Where Cost of Fuel is included in the consideration charged [Sl No. 8(vi) of NN 11/2017-CTR]

a) Where ITC on goods and services is not taken

Transport of passengers by motor cab by any motor vehicle where the cost of fuel is included in the consideration charged from the service recipient is also taxable @ 5%.

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken

However , input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle) has been allowed by Notification 31/2017 dated 13-10-2017

[Note: In contrast to Sl No. 8(ii) where credit of goods “or” services is denied, at Sl No. 8(vi) credit of goods “and“ services is denied.]

This anamoly however stands corrected by S.No. (i)(b) of Notification 31/2017 dated 13-10-2017

b) Where ITC on goods or service is taken

If the person providing motor cab services of transportation of passengers by any motor vehicle avails input tax credit on goods or services, the tax rate applicable shall be 12%.

[As per NN 20/2017 dtd 22/08/2017]

Notification 31/2017 dated 13-10-2017 has extended the rate of 5%/12% to “any motor vehicle designed to carry passengers”

5%

12%

Transportation by Motor Vehicle Where Cost of Fuel is not included in the consideration charged

As per NN 11/2017 the motor cab service where cost of fuel is not included in the consideration charged is covered by residual entry Sl No. 8(vii) and hence taxable @ 18%. There is, however no restriction for availing ITC

18%
Exemption from travel by road by cab or auto

As per Sl No. 17 of NN 12/2017-CTR , Service of transportation of passengers, with or without accompanied belongings, by—

metered cabs or auto rickshaws (including e-rickshaws) is Nil Rated

Meaning of Metered Cab

As per Para 2(zp) of NN 12/2017-CTR, “metered cab” means any contract carriage on which an automatic device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 (59 of 1988) and the rules made thereunder (but does not include radio taxi);

Note: Travel by auto rickshaw has been exempted but hand driven rickshaw has not been exempted. Hence if services of hand driven rickshaw are taken, tax may be payable on reverse charge by registered person.

“e-rickshaw” means a special purpose battery powered vehicle of power not exceeding 4000 watts, having three wheels for carrying goods or passengers, as the case may be, for hire or reward, manufactured, constructed or adapted, equipped and maintained in accordance with such specifications, as may be prescribed in this behalf

Tax on services provided through E-Commerce operator [u/s 9(5)]

[Notification 17/2017-CTR dated 28-6-17]

For Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle provided through E –Commerce operator, tax shall be paid by E-Commerce operator

Explanation.- For the purposes of this notification,-

(a) “radio taxi” means a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS);

(b) “maxicab”, “motorcab” and “motor cycle” shall have the same meanings as assigned to them respectively in clauses (22), (25) and (26) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

NIL
Renting of Any Motor Vehicle [Heading 9966] [Sl No. 10 of 11/2017-CTR]

Note: Renting of Motor vehicle can be distinguished from service by transportation of motor vehicle by the only feature that while driver is provided for service by transportation by motor vehicle along with motor vehicle , renting shall not involve driver.

Where Cost of Fuel is included in the consideration charged [Sl No 10(i) of NN 11/2017-CTR]

Where ITC is not availed

Renting of motorcab where the cost of fuel is included in the consideration charged from the service recipient is taxable @ 5% subject to condition that credit of input tax charged on goods and services used in supplying the service has not been taken

However , input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle) has been allowed by Notification 31/2017 dated 13-10-2017

5%
Where ITC is availed

As per NN 20/2017 dtd 22-08-2017, where ITC on goods or service is availed Renting of motorcab where the cost of fuel is included in the consideration charged from the service recipient is taxable @ 12%

12%
Time Charter of Vessels for transport of goods [Sl No. 10(ii) insered by 1/2018-CTR dated 25-1-2018]

Condition for availing 5% tax

Provided that credit of input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) has not been taken

5%
Where Cost of Fuel is not included in the consideration charged [Sl No. 10(iii) of NN 11/2017-CTR]

Rental services of transport vehicles with or without operators, other than 10(i) & 10(ii) is taxable @ 18%. There is, however no restriction for availing ITC

18%
Notification 31/2017 dated 13-10-2017 has extended the rate of 5%/12% to “any motor vehicle designed to carry passengers” which was earlier confined to “motor cab”
Goods transport services [Heading 9965: Sl. No. 9 of 11/2017-CTR]
Transportation of Goods by Rail [Sl No. 9(i) of NN 11/2017-CTR]

– By Indian Railways

Other wise than in containers by Indian Railways or any other person

Is taxable @ 5% as per

Prohibition to use ITC on Goods

Concessional tax rate of 5% is subject to condition that credit of input tax charged in respect of goods in supplying the service is not utilised for paying central tax or integrated tax on the supply of the service

Comments: Since capital goods are also goods ITC on rail shall not be allowed. However if the rail is leased, then it becomes service and hence ITC shall be allowed.

5%
Transport of goods in containers by rail by any person other than Indian Railways [Sl No. 9(iv) of NN 11/2017-CTR]

Also there is no restriction on the use of ITC.

12%
Exemption for transportation of goods by rail

As per Sl No. 20 of NN 12/2017-CTR, Services by way of transportation by rail from one place in India to another of the following goods –

(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(b) defence or military equipments;

(c) newspaper or magazines registered with the Registrar of Newspapers;

(d) railway equipments or materials;

(e) agricultural produce;

(f) milk, salt and food grain including flours, pulses and rice; and

(g) organic manure

As per Para 2(d) “agricultural produce” means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market

[Transportation to place outside India is not exempt]

Transportation of goods in a vessel [Sl No. 9(ii) of NN 11/2017-CTR]

Transportation of goods in vessel is taxable @ 5% subject to condition that credit of input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) used in supplying the service has not been taken.

It means ITC on ships, vessels including bulk carriers and tankers shall be allowed.

5%
Exemption for transportation of goods by vessel

As per Sl No. 20 of NN 12/2017-CTR, Services by way of transportation by vessel from one place in India to another of the following goods –

(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(b) defence or military equipments;

(c) newspaper or magazines registered with the Registrar of Newspapers;

(d) railway equipments or materials;

(e) agricultural produce;

(f) milk, salt and food grain including flours, pulses and rice; and

(g) organic manure

As per Para 2(d) “agricultural produce” means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market

[Transportation to place outside India was not exempt till 25-01-18]

However vide Notification 2/2018-CTR dated 25-01-18, Exemption has been provided by insertion of Sl No. 19B to Notification 12/2017-CTR and hence Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India. Have been exempted.

Condition:

Nothing contained in this serial number [19B] shall apply after the 30th day of September, 2018 2019 [Time extended by 14/2018-CTR dtd 26-7-18]

Reverse Charge on Transportation of Goods by Vessel [Sl No. 10 of 10/2017-IGST(Rate) dated 28-6-17]

Services supplied by a person located in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. To Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory.

NIL
Exemption for transportation by Inland Waterways

Also as per Sl No. 18(b) of NN 12/2017-CTR, services by way of transportation of goods by inland waterways is exempt.

NIL
Transportation of goods by Multil modal Transport [Sl No. 9(vi)]

[Inserted by 13/2018-CTR dated 26-07-18]

“multimodal transportation” means carriage of goods by at least two different modes of transport from the place of acceptance of goods to the place of delivery of goods by a multimodal transporter;

“mode of transport” means carriage of goods by road, air, rail, inland waterways or sea

“multimodal transporter” means a person who,-

(A) enters into a contract under which he undertakes to perform multimodal transportation against freight; and

(B) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier participating in the multimodal transportation and who assumes responsibility for the performance of the said contract.

12%
Transportation of Goods by Air

Transportation of goods by Air shall be covered by Sl No. 9(v) of NN 11/2017-CTR, being residuary clause and shall be taxable @ 18%.Also there is no restriction on availment of ITC

Exemption for transportation of goods to place outside India

[Notification No. 2/2018-CTR dated 25-01-2018]

Services by way of transportation of goods by an aircraft from customs station of clearance in India to a place outside India. Have been exempted.

Condition:

Nothing contained in this serial number [19A] shall apply after the 30th day of September, 2018 2019

[Time extended by 14/2018 dated 26-7-18]

18%
Leasing of Air craft for Air Cargo [Sl No. 17(v) of 11/2017-CTR]

Leasing of aircrafts by an operator for operating scheduled air transport service or scheduled air cargo service by way of transaction covered by clause (f) paragraph 5 of Schedule II of the Central Goods and Services Act, 2017 i.e. transfer of right to use is taxable @ 5% subject to condition that credit of input tax charged on goods used in supplying the service has not been taken

(a) “operator” means a person, organization or enterprise engaged in or offering to engage in aircraft operations;

(b) “scheduled air transport service” means an air transport service undertaken between the same two or more places operated according to a published time table or with flights so regular or frequent that they constitute a recognisable systematic series, each flight being open to use by members of the public;

(c) “scheduled air cargo service” means air transportation of cargo or mail on a scheduled basis according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, not open to use by passengers.

5%
Exemption for Air Cargo from outside India [Sl No. 19 of NN 20/2017-CTR]

Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of clearance in India. Is Nil Rated

Supporting services in transport [Heading 9967 Sl No. 11 of 11/2017-CTR]
Exemption for Transportation of goods by road

As per Sl No. 18(a) of NN 12/2017-CTR, Services by way of transportation of goods by road is exempt except the services of –

(i) Goods Transport Agency

(ii) Courier Agency

Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. [Explanation to Sl No. 9(iii) and 11(i) of NN 11/2017-CTR]

Courier Agency

As per Para 2(u) of 12/2017-CTR, “courier agency” means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles

Services of Transportation of Goods by Goods Transport Agency [S.No. 11(i)]
Where ITC on Goods and services is not taken

Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use) is taxable @ 5% provided that credit on goods and services used in supplying the service has not been taken

5%
Where ITC on Goods and services is taken [NN 20/2017-CTR dated 22-08-17 ]

Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use) is taxable @ 12% where credit on goods and services used in supplying the service has been taken

Condition of paying [email protected]% on all GTA services

Goods transport agency opting to pay tax @ 12% under this entry shall, thenceforth, be liable to pay central tax @ 12% on all the services of GTA supplied by it.

12%
Other Support Services in Transport [Sl No. 11(ii) of NN 11/2017-CTR] 18%
Exemption for Transportation of Goods by Goods Transport Agency

1. Services provided by a goods transport agency, by way of transport in a goods carriage of –

(a) agricultural produce;

(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;

(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;

(d) milk, salt and food grain including flour, pulses and rice;

(e) organic manure;

(f) newspaper or magazines registered with the Registrar of Newspapers;

(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

(h) defence or military equipments.

[Sl No. 12 of 12/2017-CTR]

2.Services by way of giving on hire

(b) to a goods transport agency, a means of transportation of goods.

[Sl No.22 of 12/2017-CTR]

3. Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person, other than the following recipients, namely: –

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) any Society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any Co-operative Society established by or under any law for the time being in force; or

(d) any body corporate established, by or under any law for the time being in force; or

(e) any partnership firm whether registered or not under any law including association of persons;

(f) any casual taxable person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act.

NIL
Reverse Charge on GTA who has not paid tax at the rate of 12% [Sl No. 1 of 13/2017 and amended by 22/2017-CTR dated 22-8-17]

Supply of Services by a goods transport agency (GTA) [who has not paid tax @ 12%] in respect of transportation of goods by road to-

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person located in taxable territory.

A “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm [Notification 21/2017 dated 22-8-17]

The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification{ Explanation (a) to 13/2017-CTR]

Transportation of natural gas and other petroleum products through pipeline , where ITC is not taken [Sl No. 9(v) of 11/2018]

Transportation of natural gas, petroleum crude,motor spirit (commonly known as petrol), high speed diesel or aviation turbine fuel] through pipeline [Substitued for “natural gas” by Notification 1/2018-CTR dated 25-1-2018]

Comments : From 13-10-17 to 25-01-18, transportation of natural gas only was taxable @ 5%. Before 13-10-17, transportation of all the products was taxable @ 18%.

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken

[Not 31/2017 dated 13-10-17]

5%
Transportation of natural gas and other petroleum products through pipeline

Where ITC is taken

[Not 31/2017 dated 13-10-17]

12%
Exemption in Transportation Services

1. Service by way of access to a road or a bridge on payment of toll charges [Sl No. 23 of 12/2012-CTR]

2. Service by way of access to a road or a bridge on payment of annuity. Sl No. 23A of 12/2012-CTR]Inserted by 32/2017 dated 13-10-17

3. Services by way of loading, unloading, packing, storage or warehousing of rice. [Sl No.24 of 12/2012-CTR]

4. Loading, unloading, packing, storage or warehousing of agricultural produce [S. No. 54(e) of 12/2017]

5. Services by way of warehousing of minor forest produce. [Sl No. 24A of 12/2017 inserted by 14/2018 dtd 26-7-18]

6. Supply of service associated with transit cargo to Nepal and Bhutan (landlocked countries) [Notification 30/2017 dated 29-9-17]

Postal and Courier Services [Heading 9968 Sl No. 12 of N/N 11/2017] 18%
Electricity, Gas , Water and other Distribution Services [Heading 9969 Sl No. 13 of N/N 11/2017] 18%
Exemption

Transmission or distribution of electricity by an electricity transmission or distribution utility is exemption under Sl. No. 25 of 12/2012-CTR

Issue:

Whether the activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act are exempt from GST?

Clarification

(1) Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No. 12/2017- CT (R), Sl. No. 25. The other services such as, –

i. Application fee for releasing connection of electricity;

ii. Rental Charges against metering equipment;

iii. Testing fee for meters/ transformers, capacitors etc.;

iv. Labour charges from customers for shifting of meters or shifting of service lines;

v. charges for duplicate bill;

provided by DISCOMS to consumer are taxable.

[Circular No. 34/2018 dated 01-03-2018]

Section 7 Financial and related services; real estate services; and rental and leasing services.

Covers

Sl No.15:Heading 9971 : Financial and Related Services

Sl. No.16:Heading 9972 : Real Estate Services

Sl. No.17:Heading 9973: Leasing or rental services, with or without operator

Heading 9971 : Financial and Related Services
Reverse Charge

Reverse Charge on services supplied by Insurance Agent [Sl. No. 7 of 13/2017-CTR]

Services supplied by an insurance agent to any person carrying on insurance business , located in the taxable territory

Reverse Charge on services supplied by Recovery Agent [Sl. No. 8 of 13/2017-CTR]

Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company, located in the taxable territory

Reverse Charge on services supplied by DSA [Sl. No. 11 of 13/2017-CTR Inserted by 15/2018-CTR dated 26-7-18]

Services supplied by individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs), a banking company or a non-banking financial company, located in the taxable territory shall be liable to pay tax on reverse charge

Exemption in Financial and Related Services

1.Services by the Reserve Bank of India .

For services provided by overseeing committee constituted by RBI to RBI, tax is payable on reverse charge basis u/s 9(3) by RBI [As per Notification dated 33/2017 dated 13-10-2017]

2. Services by way of—

(a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount

(other than interest involved in credit card services); [Sl No. 27 of 12/2017-CTR]

“interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) but does not include any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised; [Para 2(zk) of 12/2017-CTR

(b) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers [Sl No. 27 of 12/2017-CTR]

3. Services of life insurance business provided by way of annuity under the National Pension System regulated by the Pension Fund Regulatory and Development Authority of India under the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013). [Sl No. 28 of 12/2017-CTR]

4. Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the Group Insurance Schemes of the Central Government

[Sl No. 29 of 12/2017-CTR]

5. Services of life insurance provided or agreed to be

provided by the Naval Group Insurance Fund to the personnel of Coast Guard under the Group Insurance Schemes of the Central Government.

6. Services by the Employees’ State Insurance Corporation to persons governed under the Employees’ State Insurance Act, 1948 (34 of 1948).

[Sl No. 30 of 12/2017-CTR]

7. Services provided by the Employees Provident Fund Organisation to the persons governed under the Employees Provident Funds and the Miscellaneous Provisions Act, 1952 (19 of 1952).

[Sl No. 31 of 12/2017-CTR]

8. Services by Coal Mines Provident Fund Organisation to persons governed by the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948). [Sl No. 31A of 12/2017 inserted by 14/2018 dtd 26-7-18]

9. Services by National Pension System (NPS) Trust to its members against consideration in the form of administrative fee. [Sl No. 31B of 12/2017 inserted by 14/2018 dtd 26-7-18]

10. Services provided by the Insurance Regulatory and Development Authority of India to insurers under the Insurance Regulatory and Development Authority of India Act, 1999 (41 of 1999).

[Sl No. 32 of 12/2017-CTR]

11. Services provided by the Securities and Exchange Board of India set up under the Securities and Exchange Board of India Act, 1992 (15 of 1992) by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market

[Sl No. 33 of 12/2017-CTR]

12. Services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand rupees in a single transaction transacted through credit card, debit card, charge card or other payment card service.

Explanation.— For the purposes of this entry, “acquiring bank” means any banking company, financial institution including non-banking financial company or any other person, who makes the payment to any person who accepts such card.

[Sl No. 34 of 12/2017-CTR]

11. Services of general insurance business provided under following schemes –

(a) Hut Insurance Scheme;

(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme);

(c) Scheme for Insurance of Tribals;

(d) Janata Personal Accident Policy and Gramin Accident Policy;

(e) Group Personal Accident Policy for Self-Employed Women;

(f) Agricultural Pumpset and Failed Well Insurance;

(g) premia collected on export credit insurance;

(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture; Restructured Weather Based Crop Insurance Scheme (RWCIS) [Noti. 21/2017]

(i) Jan Arogya Bima Policy;

(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana) Pradhan Mantri Fasal BimaYojana (PMFBY) [Noti. 21/2017];

(k) Pilot Scheme on Seed Crop Insurance;

(l) Central Sector Scheme on Cattle Insurance;

(m) Universal Health Insurance Scheme;

(n) Rashtriya Swasthya Bima Yojana;

(o) Coconut Palm Insurance Scheme;

(p) Pradhan Mantri Suraksha BimaYojna;

(q) Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

[Sl No. 35 of 12/2017-CTR]

12.Services of life insurance business provided under following schemes-

(a) Janashree Bima Yojana;

(b) Aam Aadmi Bima Yojana;

(c) Life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of fifty thousand two lacs rupees;

(d) Varishtha Pension BimaYojana;

(e) Pradhan Mantri Jeevan JyotiBimaYojana;

(f) Pradhan Mantri Jan DhanYogana;

(g) Pradhan Mantri Vaya Vandan Yojana.

[Sl No. 36 of 12/2017-CTR]

13. Services by way of reinsurance of the insurance schemes specified in serial number 11 & 12 above

14. Services by way of collection of contribution under the Atal Pension Yojana.

15. Services by way of collection of contribution under any pension scheme of the State Governments. [Sl No. 38 of 12/2017-CTR]

16. Services by the following persons in respective capacities –

(a) business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch;

(b) any person as an intermediary to a business facilitator or a business correspondent with respect to services mentioned in entry (a); or

(c) business facilitator or a business correspondent to an insurance company in a rural area

[Sl No. 39 of 12/2017-CTR]

17. Services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory

[Sl No. 40 of 12/2017-CTR]

Circular 16/2017-CTR dated 15-11-17

GST leviable on General Insurance policies provided by a State Government to employees of the State government/ Police personnel, employees of Electricity Department or students of colleges/ private schools etc. where premium is paid by State Government are exempt from GST under Sl. No. 40 of notification No. 12/2017-Central Tax (Rate).

If the premium is not paid by the government but by the employees, students still exemption is available under Sl No. 6 of 12/2017-CTR dated 28-6-17.

18.Services by an intermediary of financial services located in a multi services SEZ with International Financial Services Centre (IFSC) status to a customer located outside India for international financial services in currencies other than Indian rupees (INR).

Explanation.- For the purposes of this entry, the intermediary of financial services in IFSC is a person,-

(i) who is permitted or recognised as such by the Government of India or any Regulator appointed for regulation of IFSC; or

(ii) who is treated as a person resident outside India under the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015; or

(iii) who is registered under the Insurance Regulatory and Development Authority of India (International Financial Service Centre) Guidelines, 2015 as IFSC Insurance Office; or

(iv) who is permitted as such by Securities and Exchange Board of India (SEBI) under the Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015.

19.Services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector Undertakings(PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the financial institutions. [Sl No. 34A of 12./2017-CTR Inserted by 14/2018-CTR dated 26-7-18]

Issue

Whether the guarantee provided by State Government to state owned companies against guarantee commission, is taxable under GST?

Clarification:

The service provided by Central Government/State Government to any business entity including PSUs by way of guaranteeing the loans taken by them from financial institutions against consideration in any form including Guarantee Commission is taxable

[Circular No. 34/2018 dated 01-03-2018]

The above circular gets over Ruled by Notification 14/2018-CTR dated 26-7-18

Services provided by a foreman of a chit fund in relation to chit. [Sl No. 15(i) of 11/2017-CTR]

Explanation.-

(a) “chit” means a transaction whether called chit, chit fund, chitty, kuri, or by whatever name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to a prize amount;

(b) “foreman of a chit fund” shall have the same meaning as is assigned to the expression “foreman” in clause (j) of section 2 of the Chit Funds Act, 1982 (40 of 1982).

Subject to condition that credit of goods used in supplying the service ahs not been taken

There is not condition not to avail ITC on services.

12%
Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.

[Sl No. 15(ii) of 11/2017-CTR]

Same rate of central tax as on supply of like goods involving transfer of title in goods
Any transfer of right in goods or of undivided share in goods without the transfer of title thereof. [Sl No. 15(iii) of 11/2017-CTR]

Circular 32/2018 dated 12-02-2018

Issue: What is the GST rate applicable on rental services of self-propelled access equipment (Boom Scissors/ Telehandlers)? The equipment is imported at GST rate of 28% and leased further in India where operator is supplied by the leasing company, diesel for working of machine is supplied by customer and transportation cost including loading and unloading is also paid by the customer

Clarification: Leasing or rental services, with or without operator, for any purpose are taxed at the same rate of GST as applicable on supply of like goods involving transfer of title in goods. Thus, the GST rate for the rental services in the given case shall be 28%, provided the said goods attract GST of 28%. IGST paid at the time of import of these goods would be available for discharging IGST on rental services. Thus, only the value added gets taxed. [Sl. No 17(vii) of notification No. 11/2017-CT(Rate) dated 28.6.17 as amended refers].

Same rate of central tax as on supply of like goods involving transfer of title in goods
Leasing of Air craft for Air Transport [Sl No. 15(iv) and 17(v) of 11/2017-CTR]

Leasing of aircrafts by an operator for operating scheduled air transport service or scheduled air cargo service by way of transaction covered by clause (f) paragraph 5 of Schedule II of the Central Goods and Services Act, 2017 i.e. transfer of right to use subject to condition that credit of input tax charged on goods used in supplying the service has not been taken

(a) “operator” means a person, organization or enterprise engaged in or offering to engage in aircraft operations;

(b) “scheduled air transport service” means an air transport service undertaken between the same two or more places operated according to a published time table or with flights so regular or frequent that they constitute a recognisable systematic series, each flight being open to use by members of the public;

(c) “scheduled air cargo service” means air transportation of cargo or mail on a scheduled basis according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, not open to use by passengers.

5%
Real Estate Service [Heading 9972]

[Sl No. 16(iii)]

18%
Exempt Real Estate Service

1. Services by way of renting of residential dwelling for use as residence. [Sl No.12 of 12/2017-CTR]

2. One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable payable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, or plots for development of infrastructure for financial business provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent. or more ownership of Central Government, State Government, Union territory to industrial units or the developers in any industrial or financial business area

[Sl No. 41 of 12/2017-CTR and Amendments made by 32/2017 dated 13-10-17]

3. Exemption for Lease of Land by Government to Governmental Authority or Government Entity [Notification 1/2018 dated 25-01-18] [Sl No. 16(i) of 11/2017]

Services by the Central Government, State Government, Union territory or local authority to governmental authority or government entity, by way of lease of land is Nil Rated

4. Exemption for lease of land for construction of flats and for specified works contract[Notification 1/2018 dated 25-01-18] [Sl No. 16(ii) of 11/2017]

Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of construction of flats, etc.specified in the entry in column (3), against serial number 3, at item (i); sub-item (b), sub-item (c), subitem (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi) is NIL Rated

Provided that nothing contained in this entry shall apply to an amount charged for such lease and sub-lease in excess of one third of the total amount charged for the said composite supply. Total amount shall have the same meaning for the purpose of this proviso as given in paragraph 2 of this notification

NIL
Leasing or rental services, with or without operator (Heading 9973)
Transfer of IPR in goods other that IT Software [SNO. 17(i) of 11/2017-CTR]

Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right in respect of goods other than Information Technology software.

12%
Transfer of IPR in IT Software [Sl No. 17(ii) of 11/2017-CTR]

Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right in respect of Information Technology software

18%
Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.

[Sl No. 17(iii) of 11/2017]

Same rate of central tax as on supply of like goods involving transfer of title in goods
Any transfer of right in goods or of undivided share in goods without the transfer of title thereof

[Sl No. 17(iv) of 11/2017]

Same rate of central tax as on supply of like goods involving transfer of title in goods
Leasing of Air craft for Air Transport [Sl No. 15(iv) and 17(v) of 11/2017-CTR]

Leasing of aircrafts by an operator for operating scheduled air transport service or scheduled air cargo service by way of transaction covered by clause (f) paragraph 5 of Schedule II of the Central Goods and Services Act, 2017 i.e. transfer of right to use subject to condition that credit of input tax charged on goods used in supplying the service has not been taken

(a) “operator” means a person, organization or enterprise engaged in or offering to engage in aircraft operations;

(b) “scheduled air transport service” means an air transport service undertaken between the same two or more places operated according to a published time table or with flights so regular or frequent that they constitute a recognisable systematic series, each flight being open to use by members of the public;

(c) “scheduled air cargo service” means air transportation of cargo or mail on a scheduled basis according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, not open to use by passengers.

5%
Leasing of motor vehicles purchased and leased prior to 1st July 2017; [ Sl No. 17(vi) of Notification 11/2017] 65 per cent. of the rate of central tax as applicable on supply of like goods involving transfer of title in goods.

Note:- Nothing contained in this entry shall apply on or after 1st July, 2020.

Time charter of vessels for transport of goods.[Sl No. 17(vii)]

Condition

Provided that credit of input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) has not been taken

[Inserted by Notification 1/2018-CTR dated 25-01-2018]

5%
Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v),(vi) and (vii) above Same rate of central tax as applicable on supply of like goods involving transfer of title in goods
Exemption in leasing Services

1. Services by way of giving on hire –

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b) to a goods transport agency, a means of transportation of goods.

c) motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school

education and education upto higher secondary school or equivalent.

[Inserted by 2/2018-CTR dated 25-01-18]

2. Services provided by the Central Government, State Government, Union territory or local authority by way of allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the period prior to the 1st April, 2016, on payment of licence fee or spectrum user charges, as the case may be

3. Services of leasing of assets (rolling stock assets including wagons, coaches, locos) by the Indian Railways Finance Corporation to Indian Railways.

Section 8: Business and Production Services Covers

Heading 9981 Research and development services.
Heading 9982 :Legal and accounting services
Heading 9983 :Other professional, technical and business services

Reverse Charge on transfer of Copyrights {Sl No. 9 of 13/2017-CTR]

Supply of services by an author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like, located in taxable territory

Exemption

Food Safety: Services by way of licensing, registration and analysis or testing of food samples supplied by the Food Safety and Standards Authority of India (FSSAI) to Food Business Operators. [Sl No. 47A of 12/2017-CTR Inserted by 14/2018-CTR dated 26-7-18]

Books sold after obtaining copy right [Circular 27/2018 dated 04-01-2018]

To clarify whether supply in the situations listed below shall be treated as a supply of goods or supply of service: –

1. The books are printed/ published/ sold on procuring copyright from the author or his legal heir. [e.g. White Tiger Procures copyright from Ruskin Bond]

2. The books are printed/ published/ sold against a specific brand name. [e.g.Manorama Year Book]

3. The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian edition (same language) of foreign books. [e.g. Penguin (India) Ltd. pays fees to Routledge (London)] The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian language edition (translated). [e.g. Ananda Publishers Ltd. pays fees to Penguin (NY)]

Heading 9984 :Telecommunications, broadcasting and information supply services
Heading 9985 : Tour Operator Services
Heading 9986: Support Service to Agriculture
Heading 9987 :Maintenance, repair and installation (except construction) services
Heading 9988 :Manufacturing services on physical inputs (goods) owned by others
Heading 9989 :Other manufacturing services; publishing, printing and reproduction services; materials recovery services
Heading 9981 Research and development services.

Exemption in Research and Development

Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:-

(a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and

(b) a period of three years has not elapsed from the date of entering into an agreement as an incubatee

18%
Heading 9982 :Legal and accounting services

Exemption in legal services

Services provided by-

(a) an arbitral tribunal to –

(i) any person other than a business entity; or

(ii) a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of special category states) in the preceding financial year;

(iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity;[Inserted by 2/2018-CTR dated 25-01-18]

Issue :

1. A customer pays fees while registering complaints to Consumer Disputes Redressal Commission office and its subordinate offices These fees are credited into State Customer Welfare Fund’s bank Account

2. Consumer Disputes Redressal Commission office and its

subordinate offices charge penalty in cash when it is required.

3. When a person files an appeal to Consumers Disputes Redressal Commission against order of District Forum, amount equal to 50% of total amount imposed by the District Forum or Rs 25000/- whichever is less, is required to be paid

Clarification:

Services by any court or Tribunal established under any law for the time being in force is neither a supply of goods nor services. Consumer Disputes Redressal Commissions (National/ State/ District) may not be tribunals literally as they may not have been set up directly under Article 323B of the Constitution. However, they are clothed with the characteristics of a tribunal on account of the following: –

(1) Statement of objects and reasons as mentioned in the Consumer Protection Bill state that one of its objects is to provide speedy and simple redressal to consumer disputes, for which a quasi judicial machinery is sought to be set up at District, State and Central levels.

(2) The President of the District/ State/National Disputes Redressal Commissions is a person who has been or is qualified to be a District Judge, High Court Judge and Supreme Court Judge respectively.

(3) These Commissions have been vested with the powers of a civil court under CPC for issuing summons, enforcing attendance of defendants/witnesses, reception of evidence, discovery/production of documents, examination of witnesses, etc.

(4) Every proceeding in these Commissions is deemed to be judicial proceedings as per sections 193/228 of IPC.

(5) The Commissions have been deemed to be a civil court under CrPC.

(6) Appeals against District Commissions lie to State Commission while appeals against the State Commissions lie to the National Commission. Appeals against National Commission lie to the Supreme Court.

In view of the aforesaid, it is hereby clarified that fee paid by litigants in the Consumer Disputes Redressal Commissions are not leviable to GST. Any penalty imposed by or amount paid to these Commissions will also not attract GST.

[Circular 32/2018-GST dated 12-02-2018]

(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to-

(i) an advocate or partnership firm of advocates providing legal services;

(ii) any person other than a business entity; or

(iii) a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of special category states) in the preceding financial year;

(iv) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity [Inserted by 2/2018-CTR dated 25-01-18]

(c) a senior advocate by way of legal services to-

(i) any person other than a business entity; or

(ii) a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of special category states) in the preceding financial year

“business entity” means any person carrying out business

(iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity [Inserted by 2/2018-CTR dated 25-01-18]

Reverse Charge on legal services[Sl No. 2 of 13/2017-CTR]

Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.

The business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification.[Explanation (c) to 13/2017-CTR]

Reverse Charge on Arbitral Tribunal Service [Sl No. 3 of 13/2017-CTR]

Services supplied by an arbitral tribunal to a business entity located in taxable territory.

Circular 27/2018 dated 04-01-2018

Whether legal services other than representational services provided by an individual advocate or a senior advocate to a business entity are liable for GST under reverse charge mechanism?

Yes. In case of legal services including representational services provided by an advocate including a senior advocate to a business entity, GST is required to be paid by the recipient of the service under reverse charge mechanism, i.e. the business entity.

Press Release No. 81 on Legal Services by Advocates including Senior advocates dated 15-07-2017

There are points being raised about the applicability of GST on legal services provided by advocates – whether it is in forward charge or reverse charge. It may be mentioned that there is no change made in taxation of legal services in the GST era.

2. In this context, it is further clarified that legal service has been defined to mean any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.

3. It is further clarified thatnotification No. 13/2017-Central Tax (Rate) dated 28.6.2017 (Serial No. 2)specifies, inter alia,the following service under reverse charge mechanism,-

“Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.”

4. The words “by way of legal services” are preceded and succeeded by comma. Therefore, the said words apply to an individual advocate including a senior advocate and a firm of advocates. Legal services provided by either of them are liable for payment of GST under reverse charge by the business entity.The words “by way of representational services before any court, tribunal or authority….” appear in conjunction with senior advocate without a comma and merely describe the nature and mode of representational services provided by a senior advocate to a business entity. It, therefore, follows that legal services, which includes representational services, provided by advocates are under reverse charge.

18%
Heading 9983 :Other professional, technical and business services
(i) Selling of space for advertisement in print media.

Meaning of advertisement [Para 2(a) of 12/2012-CTR]

“advertisement” means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person (Because it shall be covered by sponsorship)

“print media” means,—

(i) ‘book’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867), but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes;

(ii) ‘newspaper’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867)

5%
(ii) Other professional, technical and business services other than (i) above. 18%
Press Release NO. 92 on Selling of Space for advertisement in print media dated 23-8-17

Query has been raised before this Ministry regarding GST applicable on selling of space for advertisement in print media.

Selling of space for advertisement in print media is leviable to GST @ 5%.If the advertisement agency works on principal to principal basis, that is, buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST @5% on the full amount charged by advertisement agency from the client

On the other hand, if the advertisement agency sells space for advertisement as an agent of the newspaper on commission basis, it would be liable to pay [email protected] 18% on the sale commission it receives from the Newspaper. ITC of GST paid on such sale commission would be available to Newspaper.

However, if the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax @18%. If such supplies are part of any composite supply, the rate applicable for the principal supply shall apply.

Therefore, everything depends on the terms of the contract between the

newspaper, advertisement agency and the client.

Exemption in Professional, technical and business services

1. Services by a veterinary clinic in relation to health care of animals or birds.

2. Services provided by the Central Government, State Government, Union territory or local authority by way of-

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.

3.Taxable services, provided or to be provided, by a Technology Business Incubator or a Science and Technology Entrepreneurship Park recognised by the National Science and Technology Entrepreneurship Development Board of the Department of Science and Technology, Government of India or bio-incubators recognised by the Biotechnology Industry Research Assistance Council, under the Department of Biotechnology, Government of India.

4.Exemption for Skill Development Assessing Bodies[Sl No. 70 of 12/2012-CTR]

Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under the Skill Development Initiative Scheme

NIL
Heading 9984:Telecommunications, broadcasting and information supply services

Press Release No. 56 dated 26-05-2017 on Telecom Sector

Telecommunication services presently attract service tax of 14% along with Swachh Bharat Cess (SBC) of 0.5% and Krishi Kalyan Cess (KKC) of 0.5%. While service tax is a pure value added tax, the above mentioned cesses are not. This is for the reason that while no ITC (input tax credit) of SBC is available, the ITC of KKC is allowed to be set off only against KKC. Therefore, both the cesses are turnover tax.

2. As against the above, the telecommunication services will attract GST of 18% in the GST regime, which is a pure value added tax because full ITC of inputs and input services used in the course or furtherance of business by the telecommunication service provider would be available.

3. Moreover, presently telecom service providers are neither eligible for credit of VAT paid on goods nor of special additional duty (SAD) paid on imported goods/equipment. However, under GST, telecom service providers would avail credit of IGST paid on domestically procured goods as also imported goods. As per some estimates, this additional input tax credit would be as much as 2% of the turnover of the telecom industry. Further, ITC of service tax paid on assignment of spectrum by the Government in 2016 is presently allowed to be availed of by the telcos over a period of 3 years. In the GST regime, the entire credit can be taken in the same year. Resultantly, the balance two-thirds credit of the previous year would be admissible in the current financial year itself. All of these would reduce the telcos liability to pay GST through cash to about 87% of what they paid in the last fiscal.

4. Thus, the telcos are required to re-work their costing and credits availability and re-jig their prices and ensure that the increased availability of credits is passed on to the customers by lowering their costs.

9984 (Telecommu nications, broadcasting and information supply services)

(i) Supply consisting only of e-book.

Explanation.- For the purposes of this notification, “ebooks” means an electronic version of a printed book (falling under tariff item 4901 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) supplied online which can be read on a computer or a hand held device.

[Inserted by 13/2018-CTR dated 26-07-2018]

5%
(ii) Telecommunications, broadcasting and information supply services other than (i) above. 18%
Exemption

1. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India. [Sl No. 49 of 12/2012-CTR]

2. Services of public libraries by way of lending of books, publications or any other knowledge-enhancing content or material.

3. Services provided by the Goods and Services Tax Network to the Central Government or State Governments or Union territories for implementation of Goods and Services Tax.

Heading 9985: Support Services
(i) Supply of tour operators services.

Explanation.- “tour operator” means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours.

Provided that credit of input tax charged on goods and services used in supplying the service other than the input tax credit of input service in the same line of business (i.e. tour operator service procured [Inserted by Notification 1/2018-CTR dated 25-01-2018] from another tour operator)has not been taken

The bill issued for supply of this service indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour.

5%
(i) Services by way of house-keeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017.

Condition

Provided that credit of input tax charged on goods and services has not been taken

[Inserted by Notification 1/2018 dated 25-01-2018]

Tax Payable by E-Commerce Operator

On these service tax is payable by E-Commerce operator u/s 9(5) through whom these services are provided [Notification 23/2017-CTR dated 22-8-17]

5%
(iii) Support services other than (i) above

Housekeeping Services not provided through E-Commerce operator shall be taxable @ 18%

Reverse Charge on Sponsorship [Sl. No. 4 of 13/2017-CTR]

Services provided by way of sponsorship to any body corporate or partnership firm, located in taxable territory

Reverse Charge on services supplied by Director[Sl. No. 6 of 13/2017-CTR]

Services supplied by a director of a company or a body corporate to the said company or the body corporate , where The company or a body corporate located in the taxable territory

Reverse Charge on services supplied by Insurance Agent [Sl. No. 7 of 13/2017-CTR]

Services supplied by an insurance agent to any person carrying on insurance business , located in the taxable territory

Reverse Charge on services supplied by Recovery Agent [Sl. No. 8 of 13/2017-CTR]

Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company, located in the taxable territory

Reverse Charge on services supplied by DSA [Sl. No. 11 of 13/2017-CTR Inserted by 15/2018-CTR dated 26-7-18]

Services supplied by individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs), a banking company or a non-banking financial company, located in the taxable territory shall be liable to pay tax on reverse charge
18%
Exemption in support Services [Sl No. 53 of 12/2017-CTR]

1. Services by the following persons in respective capacities –

(a) business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch;

(b) any person as an intermediary to a business facilitator or a business correspondent with respect to services mentioned in entry (a); or

(c) business facilitator or a business correspondent to an insurance company in a rural area.

[Sl No. 39 of 12/2012-CTR]

2. Services by way of sponsorship of sporting events organised –

(a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, State, zone or Country;

(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;

(c) by the Central Civil Services Cultural and Sports Board;

(d) as part of national games, by the Indian Olympic Association; or

(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.

3.Exemption for Skill Development Assessing Bodies[Sl No. 70 of 12/2012-CTR]

Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under the Skill Development Initiative Scheme

NIL
Heading 9986
(i) Support services to agriculture, forestry, fishing, animal husbandry.

Explanation. – “Support services to agriculture, forestry, fishing, animal husbandry” mean –

(i) Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of—

(a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing;

(b) supply of farm labour;

(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;

(d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

(e) loading, unloading, packing, storage or warehousing of agricultural produce;

Misleading report on tax on leasing of agricultural land [Press Release No. 162 dated 28-5-2018]

It has been reported in certain section of the Press that certain changes have been made in GST law relating to farmers, which will come into force with effect from 1st June, 2018 according to which farmers would be required to take registration and pay GST of 18% when they lease out their land.

2. This news is factually incorrect and misleading. There has been no change in the GST law and taxation relating to farmers since July, 2017, when GST was implemented. Support services to agriculture, forestry, fishing or animal husbandry are exempt from GST. Such exempted support services include renting or leasing of vacant land with or without a structure incidental to its use. Thus, renting or leasing of land by farmers for agriculture, forestry, fishing or animal husbandry on batai (share cropping) or otherwise is exempt from GST.

3. Further, agriculturists are exempted from taking GST registration. Agriculturist has been defined to mean an individual or an HUF who undertakes cultivation of land

a) by own labour

b) by the labour of family

c) by servants or wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family.

Clarification on storage or warehousing of Tea, Coffee, jaggery, pulses, spices, dry fruit, cashew nuts [Circular 16/16/2017 dated 15-11-17]

Tea & Coffee

Tea used for making the beverage, such as black tea, green tea, white tea is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation, packing etc. on green leaf and is the processed output of the same.

Thus, green tea leaves and not tea is the “agricultural produce” eligible for exemption available for loading, unloading, packing, storage or warehousing of agricultural produce. Same is the case with coffee obtained after processing of coffee beans

Jaggery

Similarly, processing of sugarcane into jaggery changes its essential characteristics. Thus, jaggery is also not an agricultural produce

Pulses

Pulses commonly known as dal are obtained after dehusking or splitting or both. The process of de-husking or splitting is usually not carried out by farmers or at farm level but by the pulse millers. Therefore pulses (dehusked or split) are also not agricultural produce.

Gram, Rajma etc

However whole pulse grains such as whole gram, rajma etc. are covered in the definition of agricultural produce.

In view of the above, it is hereby clarified that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (de-husked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017-CT(Rate) and 12/2017-CT(Rate) and corresponding notifications issued under IGST and UGST Acts and therefore the exemption from GST is not available to their loading, packing, warehousing etc. and that any clarification issued in the past to the contrary in the context of Service Tax or VAT/ Sales Tax is no more relevant.

(f) agricultural extension services;

(g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

“(h) services by way of fumigation in a warehouse of agricultural produce [Inserted by 1/2018-CTR dated 25-1-18]

(ii) Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables.

(iii) Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce.

[Exemption provided under Sl No. 54 of 12/2017-CTR]

As per Para 4(vii) to 11/2017-CTR

agricultural produce” means any produce out of

Ø cultivation of plants and

Ø rearing of all life forms of animals, except the rearing of horses,

FOR

Ø food,

Ø fibre,

Ø fuel,

Ø raw material or

Ø other similar products,

on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market.

Exemption for Job work in relation to cultivation of plants and rearing of animals [Sl No. 55 of 12/2017-CTR]

Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce.

Clarification on taxability of custom milling of paddy[Circular No. 19/19/2017 dated 20-11-17]

Representations have been received seeking clarification on whether custom milling of paddy by Rice millers for Civil Supplies Corporation is liable to GST or is exempted under S. No 55 of Notification 12/2017 – Central Tax (Rate) dated 28th June 2017.

The matter has been examined. S. No 55 of Notification 12/2017- Central Tax (Rate) exempts carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce. Agricultural produce has been defined in the notification to mean, any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. Job work has been defined under section 2 (68) of the CGST Act to mean any treatment or process undertaken by a person on goods belonging to another registered person. Further, under Schedule II (para 3) of the CGST Act, any treatment or process which is applied to another person’s goods is a supply of service.

Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process carried out after the process of cultivation is over and paddy has been harvested. Further, processing of paddy into rice is not usually carried out by cultivators but by rice millers. Milling of paddy into rice also changes its essential characteristics. Therefore, milling of paddy into rice cannot be considered as an intermediate production process in relation to cultivation of plants for food, fibre or other similar products or agricultural produce.

In view of the above, it is clarified that milling of paddy into rice is not eligible for exemption under S. No 55 of Notification 12/2017 – Central Tax (Rate) dated 28th June 2017 and corresponding notifications issued under IGST and UTGST Acts

GST rate on services by way of job work in relation to all food and food products falling under Chapters 1 to 22 has been reduced from 18% to5% vide notification No. 31/2017-CT(R) [notification No. 11/2017-CT (Rate) dated 28.6.17, S.No. 26 refers]. Therefore, it is hereby clarified that milling of paddy into rice on job work basis, is liable to GST at the rate of 5%, on the processing charges (and not on the entire value of rice).

Exemption for Processing of Fruits and Vegetables[Sl No. 57 of 12/2017-CTR]

Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables

Services by way of artificial insemination of livestock (other than horses).

[SL No. 55A of 12/2017-CTR Inseretd by 14/2018-CTR dtd 26-7-18]

Nil
(ii)Service of exploration, mining or drilling of petroleum crude or natural gas or both

Exemption for supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both has been granted on the consideration paid to the Central Government in the form of Central Government’s share of profit petroleum as defined in the contract entered into by the Central Government in this behalf vide Notification No. 5/2018-CTR dated 25-01-2018
12%
(iii) Support services to mining, electricity, gas and water distribution. 18%
Heading 9987

(i) Services by way of house-keeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017.

Condition

Provided that credit of input tax charged on goods and services has not been taken

Tax Payable by E-Commerce Operator

On these service tax is payable by E-Commerce operator u/s 9(5) through whom these services are provided [Notification 23/2017-CTR dated 22-8-17]

5%
(ii) Maintenance, repair and installation (except construction) services, other than (i) above.

Housekeeping services not provided through E-Commerce operator shall be taxable @ 18%

18%

Job Work

Heading 9988

(Manufacturing services on physical inputs (goods) owned by others)

(i) Services by way of job work in relation to-

“job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;[S. 2(68)]

5%
(a) Printing of newspapers
b) Textiles and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);

[Notification 20/2017 dated 21-8-17]

Textile yarns (other than of man-made fibres) and textile fabrics; —

Explanation.- “man made fibres” means staple fibres and filaments of organic polymers produced by manufacturing processes either,-

(a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process [for example, poly(vinyl alcohol) prepared by the hydrolysis of poly(vinyl acetate)]; or

(b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates.

(c) Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975)

all products falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975)

[Notification 31/2017 dated 13-10-2017]

(d) Printing of books (including Braille books), journals and periodicals;
Printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5per cent. or Nil [Notification 31/2017 dated 13-10-2017]
(e) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975).
“(ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) respectively

[Inserted by 1/2018-CTR dated 25-01-18]

5%
(f) All food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) [Notification 31/2017 dated 13-10-2017] 5%
(g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said Chapter[Notification 31/2017 dated 13-10-2017] 5%
(h) manufacture of clay bricks falling under tariff item 69010010 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) [Notification 31/2017 dated 13-10-2017] 5%
‘(i) manufacture of handicraft goods [Inserted by 46/2017 dated 14-11-17]

The expression “handicraft goods” shall have the same meaning as

assigned to it in the notification No. 32/2017 -Central Tax, dated the 15th September,2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 1158 (E), dated the 15th September, 2017 as amended from time to time.

5%
(ia)Services by way of job work in relation to-

(a) manufacture of umbrella;

(b) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6per cent.

[Notification 31/2017 dated 13-10-2017]

12%
“(ii) Services by way of any treatment or process on goods belonging to another person, in relation to-

(a) printing of newspapers;

(b) printing of books (including Braille books), journals and periodicals.

[Inserted by Notification 20/2017 dated 21-8-17]

(c) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5 per cent. or Nil [Notification 31/2017 dated 13-10-2017]

5%
“(iia) Services by way of any treatment or process on goods belonging to another person, in relation to printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6per cent 12%
(iii) Tailoring Service

[Notification 1/2018-CTR dated 25-01-2018]

5%
(iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ii) , (iia) and (iii) above. 18%
Clarification on Printing Contracts [Circular No, 11/11/2017 dated 20-10-17]

1. Requests have been received to clarify whether supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc., printed with design, logo, name, address or other contents supplied by the recipient of such supplies, would constitute supply of goods falling under Chapter 48 or 49 of the First Schedule to the Customs Tariff Act, 1975 (51of 1975) or supply of services falling under heading 9989 of the scheme of classification of services annexed to notification No. 11/2017-CT(R).

2. In the above context, it is clarified that supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply.

3. Principal supply has been defined in Section 2(90) of the Central Goods and Services Tax Act as supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary.

4. In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing [of the content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services.

In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, predominant supply is that of goods and the supply of printing of the content [supplied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff.

Exemption for services by way of slaughtering of animals [Sl No. 56 of 12/2017-CTR] NIL
Heading 9989

(i) Services by way of printing of newspapers, books (including Braille books), journals and periodicals, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer

[Inserted by Notification 20/2017 dated 21-8-17]

Services by way of printing of all goods falling under Chapter 48 or 49 [including newspapers, books (including Braille books), journals and periodicals], which attract CGST @ 6 per cent. or 2.5per cent. or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer. [Notification 31/2017 dated 13-10-2017]

12%
(ii) Other manufacturing services; publishing, printing and reproduction services; materials recovery services. 18%

Changes in tax rates for Job Work

W.e.f. 01-06-2017 W.e.f. 22-08-2017 W.e.f. 13-10-17
Job Work for Printing of Newspaper and books, journals and newspapers

(Newspaper, journals, periodcals, printed books are exempt)

5% Job work for printing of Newspapers and books , Journals and newspapers only was retained at 5%

but where only content is provided by publisher and printer has obligation to provide paper also along with performing printing rate was pegged at 12%

No Change
Printing of Brochures,

leaflets and similar

printed matter, whether

or not in single sheets, Maps, atlas, charts and globe, Judicial, Non judicial stamp

papers, Court fee stamps

when sold by the

Government Treasuries or

Vendors authorized by

The Government,

Postal items, like envelope, Post card etc.,

sold by Government, rupee notes when sold to

the Reserve Bank of India

& Cheques, lose or in book form

(Supply of these items is exempt or taxable at 5%)

18% No Change 5% but where only content is provided by publisher and printer has obligation to provide paper also along with performing printing rate pegged at 12%
Printing of :

1.Children’s picture, drawing or colouring books,

2.Music, printed or in manuscript, whether or not bound or illustrated,

3.Plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes, being originals drawn by hand; hand-written texts; photographic reproductions on sensitised paper and carbon copies of the foregoing

4. Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognised face value; stamp impressed paper; banknotes; cheque forms; stock, share or bond certificates and similar documents of title

5. Transfers (decalcomanias) [The art or process of transferring pictures and designs from specially prepared paper (as to glass)]

6. Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings

6. Calendars of any kind, printed, including calendar blocks

7. Other printed matter, including printed pictures and photographs; such as Trade advertising material, Commercial catalogues and the like, printed Posters, Commercial catalogues, Printed inlay cards, Pictures, designs and photographs, Plan and drawings for architectural engineering, industrial, commercial, topographical or similar purposes reproduced with the aid of computer or any other devices.

8. Uncoated paper and

paperboard, uncoated

kraft paper,

greaseproof paper,

glassine paper,

composite paper etc.

9. Aseptic packaging

Paper

10. Boxes, pouches,

wallets and writing

compendiums, of

paper or paperboard,

containing an

assortment of paper

stationery including

writing blocks

11. Cartons, boxes and

cases of corrugated

paper or paper board

12. Exercise book, graph

book, & laboratory

note book

13. Kites

14. Paper pulp moulded

Trays

15. Braille paper

16. Paper splints for

matches, whether or

not waxed, Asphaltic

roofing sheets

[ These items are taxable @ 12%]

18% 18% 12%, whether or not paper is also provided by the printer.
Other Printing Job Work on material taxable @ 18% including printing on Cartons, boxes and

cases of non -corrugated

paper or paper board

18% 18% 18%
Textile Job Work 5% for Textile yarns (other than of man-made fibres) and textile fabrics Tax rate for Job work on all textile products falling under chapter 50 to 63 was reduced to 5% including job work on man made fibres and job work on garments or made ups
Jewellery Sector Job Work 5% for

Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975

But Job work for imitation jewellery, gold smith, silver smith wares was not specified in 5% category. Hence it was taxable at 18%

No Change Job Work for all Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin has been pegged at 5%
Processing of Hides skins and leathers 5% for

Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act,

No Change
Job Work in relation to food products 18% subject to exemption under Notification 12/2017 for

1 Slaughtering of Animals
2 pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables
3 Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination
4 processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;
5 loading, unloading, packing, storage or warehousing of agricultural produce
6 loading, unloading, packing, storage or warehousing of rice.
No Change 5%. However packaging of milk processed milk into packets is not in 5% category.
Job Work in relation to residue and waste of food industry and animal fodder 18% 18% 5% except job work for

dog and cat food put up for retail sale
Job work in relation to manufacture of umbrella
18% 18% 12%
Manufacture of clay bricks 18% 18% 5%
Other Job Work 18% No Change
Section 9: Community, Social and Personal Services and other miscellaneous services

Heading 9991 Public administration and other services provided to the community as a whole; compulsory social security services
Heading 9992 Education services
Heading 9993 Human health and social care services.
Heading 9994 Sewage and waste collection, treatment and disposal and other environmental protection services
Heading 9995 Services of membership organisations.
Heading 9996 Recreational, cultural and sporting services
Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including services nowhere else classified).
Heading 9998 Domestic services.
Heading 9999 Services provided by extraterritorial organisations and bodies.
Heading 9991 Public administration and other services provided to the community as a whole; compulsory social security services

Exemption

1. Services of life insurance business provided by way of annuity under the National Pension System regulated by the Pension Fund Regulatory and Development Authority of India under the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013). [Sl No. 28 of 12/2017-CTR]

2. Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the Group Insurance Schemes of the Central Government

[Sl No. 29 of 12/2017-CTR]

3. Services by the Employees’ State Insurance Corporation to persons governed under the Employees’ State Insurance Act, 1948 (34 of 1948).

[Sl No. 30 of 12/2017-CTR]

4. Services of general insurance business provided under following schemes –

(a) Hut Insurance Scheme;

(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme);

(c) Scheme for Insurance of Tribals;

(d) Janata Personal Accident Policy and Gramin Accident Policy;

(e) Group Personal Accident Policy for Self-Employed Women;

(f) Agricultural Pumpset and Failed Well Insurance;

(g) premia collected on export credit insurance;

(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture;

(i) Jan Arogya Bima Policy;

(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);

(k) Pilot Scheme on Seed Crop Insurance;

(l) Central Sector Scheme on Cattle Insurance;

(m) Universal Health Insurance Scheme;

(n) Rashtriya Swasthya Bima Yojana;

(o) Coconut Palm Insurance Scheme;

(p) Pradhan Mantri Suraksha BimaYojna;

(q) Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

[Sl No. 35 of 12/2017-CTR]

5. Services of life insurance business provided under following schemes-

(a) Janashree Bima Yojana;

(b) Aam Aadmi Bima Yojana;

(c) Life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of fifty thousand rupees;

(d) Varishtha Pension BimaYojana;

(e) Pradhan Mantri Jeevan JyotiBimaYojana;

(f) Pradhan Mantri Jan DhanYogana;

(g) Pradhan Mantri Vaya Vandan Yojana.

[Sl No. 36 of 12/2017-CTR]

6. Services by way of collection of contribution under the Atal Pension Yojana.

[Sl No. 37 of 12/2017-CTR]

7.Services by way of collection of contribution under any pension scheme of the State Governments.

[Sl No. 38 of 12/2017-CTR]

8.Services by the following persons in respective capacities –

(a) business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch;

(b) any person as an intermediary to a business facilitator or a business correspondent with respect to services mentioned in entry (a); or

(c) business facilitator or a business correspondent to an insurance company in a rural area

[Sl No. 39 of 12/2017]

9. Services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory

[Sl No. 40 of 12/2017]

Circular 16/2017-CTR dated 15-11-17

GST leviable on General Insurance policies provided by a State Government to employees of the State government/ Police personnel, employees of Electricity Department or students of colleges/ private schools etc. where premium is paid by State Government are exempt from GST under Sl. No. 40 of notification No. 12/2017-Central Tax (Rate).

If the premium is not paid by the government but by the employees, students still exemption is available under Sl No. 6 of 12/2017-CTR dated 28-6-17.

10.Services provided by the Central Government, State Government, Union territory or local authority by way of allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the period prior to the 1st April, 2016, on payment of licence fee or spectrum user charges, as the case may be [Sl No. 42 of 12/2017]

11. Services provided by-

(a) an arbitral tribunal to –

(i) any person other than a business entity; or

(ii) a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of special category states) in the preceding financial year

(iii)the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity

[Sl No. 45 of 12/2017]

12. Services provided by the Central Government, State Government, Union territory or local authority by way of-

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.

[Sl No. 47 of 12/2017-CTR]

13.Exemption for religious pilgrimage [Sl No.60 of 12/2012-CTR]

Services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry of External Affairs, [Omitted by 2/2018 dated 25-01-18]the Government of India, under bilateral arrangement.

14.Exemption for passport, visa, driving license, death, birth certificates [Sl No.61 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of issuance of passport, visa, driving licence, birth certificate or death certificate

15.Fines and Liquidated Damaged imposed by Government[Sl No.62 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Central Government, State Government, Union territory or local authority under such contract.

16.Right to cultivate and Rearing to Individual farmers[Sl No.63 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products.

17.Right to Use Natural Resources for One time charges assigned before 01-04-06[Sl No.64 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of assignment of right to use any natural

resource where such right to use was assigned by the Central Government, State Government, Union territory or local authority before the 1st April, 2016:

Provided that the exemption shall apply only to tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource.

18.Merchant Overtime Charges[Sl No.65 of 12/2017-CTR]

Services provided by the Central Government, State Government, Union territory by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges.

19.RTI Act :Services by way of providing information under the Right to Information Act, 2005 (22 of 2005)[Inserted Sl No. 65A of 12/2017 vide Notification 2/2018-CTR dated 25-01-18]

20.Food Safety: Services by way of licensing, registration and analysis or testing of food samples supplied by the Food Safety and Standards Authority of India (FSSAI) to Food Business Operators. [Sl No. 47A of 12/2017-CTR Inserted by 14/2018-CTR dated 26-7-18]

21.State Royalty on assigning collection of mining royalty: Services supplied by a State Government to Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty on behalf of the State Government on the mineral dispatched by the mining lease holders

Explanation.- “mining lease holder” means a person who has been granted mining lease, quarry lease or license or other mineral concession under the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957), the rules made thereunder or the rules made by a State Government under sub-section (1) of section 15 of the Mines and Minerals (Development and Regulation) Act, 1957

Provided that at the end of the contract period, ERCC shall submit an account to the State Government and certify that the amount of goods and services tax deposited by mining lease holders on royalty is more than the goods and services tax exempted on the service provided by State Government to the ERCC of assignment of right to collect royalty and where such amount of goods and services tax paid by mining lease holders is less than the amount of goods and services tax exempted, the exemption shall be restricted to such amount as is equal to the amount of goods and services tax paid by the mining lease holders and the ERCC shall pay the difference between goods and services tax exempted on the service provided by State Government to the ERCC of assignment of right to collect royalty and goods and services tax paid by the mining lease holders on royalty.

[Sl No. 65B of 12/2017-CTR Inserted by 14/2018-CTR dated 26-7-18]

18%
Heading 9992 Education services

Press Release on Education [Press Release No. 69 dated 07-07-2017]

There are some press reports that education will become expensive under GST. These are completely unsubstantiated. There is no change made in any subject relating to education in the GST era, except to reduce tax rate on certain items of education such as school bags etc.

2. It may be mentioned that services provided by an educational institution to students, faculty and staff are exempt:

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course.

3. Transportation of students, faculty and staff services provided to an educational institution (providing pre-school education and education up to higher secondary school or equivalent) are exempt from GST. Similarly, catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory, to an educational institution providing education upto higher secondary school or equivalent, are also exempt from GST. Further, security or cleaning or housekeeping services performed in such educational institutions are also exempt from GST. Finally, services relating to admission to, or conducting of examination by, such institutions, upto higher secondary, too are exempt from GST.

Thus, education upto Higher Secondary School level does not suffer GST on output services and also on most of the important input services. Some of the input services like transport, canteen etc. provided by private players to educational institutions were subject to service tax in pre-GST era and the same is continued in GST regime.

4. Furthermore, services by an entity registered under section 12AA of the Income-tax Act by way of charitable activities relating to advancement of educational programmes or skill development for

(a) abandoned, orphaned or homeless children

(b) physically or mentally abused and traumatized persons

(c) prisoners

(d) persons over the age of 65 years residing in a rural area

are also exempt from GST.

5. Hence, there has been no change in taxability of educational and other services on account of GST.

Exemption for services by Educational Insititution [Sl No. 66(a) of 12/2017-CTR]

Services provided –

(a) by an educational institution to its students, faculty and staff;

“(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee;”; [Inserted by 2/2018-CTR dated 25-01-2018]

Exemption for Services to Educational Institutions [Sl No. 66(b) of 12/2017-CTR]

(b) to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution;

(v) supply of online educational journals or periodicals [Inserted by 2/2018-CTR dated 25-01-2018]

upto higher secondary:

Provided that nothing contained in entry (i), (ii), (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.

Proviso Inserted by 2/2018-CTR dated 25-01-18

Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of,-

(i) pre-school education and education up to higher secondary school or equivalent; or

(ii) education as a part of an approved vocational education course

Meaning of Educational Institution [Para 2(y) of 12/2017-CTR]

“educational institution” means an institution providing services by way of,-

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course;

Education Boards treated as Education Institutions for examination fee

For removal of doubts, it is clarified that the Central and State Educational Boards shall be treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students

[Inserted by 14/2018-CTR dated 26-07-2018]

“approved vocational education course[Para 2(h) of 12/2017-CTR]means, –

(i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or

(ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship

Vocational Training provided by Private ITIs in Designated and Non Designated Trades [Circular 55/29/2018-GST dated 10-08-2018]

Private ITIs are exempt if education provided by them is approved as vocational education course. Approved Vocational Course is a course in designated trades notified in Apprenticeship Act . In case of designated trades, services provided to educational institutions by way of admission to or conduct of examination is also exempt being covered by Entry (b)(iv) of Sl No. 66. Also services provided by way of entrance by charging entrance fee is exempt in Entry (aa) under Sl No. 66

Serices provided by Private ITIs in non designated courses including admission to or conduct of exams or entrance fee is not exempt.

Services provided by Government ITIs

All Services provided by government ITIs are covered by services provided by government to Individuals under Sl No. 6 of 12/2017-CTR and hence exempt. It shall cover vocational training as well as conduct of exams.

GST on College Hostel Mess Fees [Circular 28/2018 dated 08-01-2018]

The educational institutions have mess facility for providing food to their students and staff. Such facility is either run by the institution/ students themselves or is outsourced to a third person. Supply of food or drink provided by a mess or canteen is taxable at 5% without Input Tax Credit [Serial No. 7(i) of notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017 refers]. It is immaterial whether the service is provided by the educational institution itself or the institution outsources the activity to an outside contractor.

Corrigendum to Circular No. 28/02/2018-GST dated 08th January 2018 dated 18-01-2018

2.1 If the catering services is one of the services provided by an educational institution to its students, faculty and staff and the said educational institution is covered by the definition given under para 2(y) of notification No. 12/2017-Central Tax (Rate), then the same is exempt. [Sl. No. 66(a) of notification No. 12/2017-Central Tax (Rate) refers]

2.2 If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than the educational institution, then it is a supply of service at entry 7(i) of notification No. 11/2017-CT (Rate) [as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017] to the concerned educational institution and attracts GST of 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken, effective from 15.11.2017.”

Exemption for Cold Chain Knowledge by National Centre [Sl No. 58 of 12/2017-CTR]

Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination

Exemption for Educational programmes of IIMs except Executive Development Programme[Sl No. 67 of 12/2017-CTR]

Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme: –

(a) two year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management;

(b) fellow programme in Management;

(c) five year integrated programme in Management.

Services for Skill Development Programmes of NSDC or SSDC [Sl No. 69 of 12/2017-CTR]

Any services provided by, _

(a) the National Skill Development Corporation set up by the Government of India;

(b) a Sector Skill Council approved by the National Skill Development Corporation;

(c) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation;

(d) a training partner approved by the National Skill Development Corporation or the Sector Skill Council,

in relation to-

(i) the National Skill Development Programme implemented by the National Skill Development Corporation; or

(ii) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or

(iv) any other Scheme implemented by the National Skill Development Corporation

Exemption for Skill Development Assessing Bodies[Sl No. 70 of 12/2012-CTR]

Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under the Skill Development Initiative Scheme

Exemption for Trainers under Rural Skill programmes [Sl No. 71 of 12/2012-CTR]

Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana implemented by the Ministry of Rural Development, Government of India by way of offering skill or vocational training courses certified by the National Council for Vocational Training.

Exemption under Govt. Sponsored Training Programmes [Sl No. 72 of 12/2012-CTR]

Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration

Exemption for Training in Arts, Culture, Sports [Sl No. 80 of 12/2012-CTR]

Services by way of training or coaching in recreational activities relating to-

(a) arts or culture, or

(b) sports by charitable entities registered under section 12AA of the Income-tax Act.

18%
Heading 9993 Human health and social care services.

Exemption for Health Care Services [Sl No. 74 of 12/2012-CTR]

Services by way of-

(a) health care services by a clinical establishment, an authorised medical practitioner or para-medics;

(b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above

“health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma;

“clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases

authorised medical practitioner” means a medical practitioner registered with any of the councils of the recognised system of medicines established or recognised by law in India and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force;

Room Rent in hospital is also exempt [Circular 27/2018 dated 04-01-2018]

Consultation Charges of Senior Doctors from Hospital

Issue: Hospitals hire senior doctors/consultants/ technicians

independently, without any contract of such persons with the patient; and pay them consultancy charges, without there being any employer employee relationship. Will such consultancy charges be exempt from GST? Will revenue take a stand that they are providing services to hospitals and not to patients and hence must pay GST?

Clarification: Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not,are healthcare services which are exempt.

[Circular 32/2018 dated 12-02-2018]

Retention Money

Issue

Hospitals charge the patients, say, Rs.10000/- and pay to the consultants/ technicians only Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure etc. Will GST be applicable on such money retained by the hospitals?

Clarification

Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India[para 2(zg) of notification No. 12/2017- CT(Rate)]. Therefore, hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and the fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt

[Circular 32/2018 dated 12-02-2018]

Food supplied to the patients:

Issue : Health care services provided by the clinical establishments will include food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity that the suppliers shall charge tax as applicable and hospital will get no

ITC. If hospitals have their own canteens and prepare their own

food; then no ITC will be available on inputs including capital goods

and in turn if they supply food to the doctors and their staff; such

supplies, even when not charged, may be subjected to GST.

Clarification: Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare

and not separately taxable. Other supplies of food by a hospital to

patients (not admitted) or their attendants or visitors are taxable

Ambulance Service provided to Government by Private Service Providers under National Health Mission(NHM) [Circular 51/25/2018 dated 31-07-2018

Service Tax clarification 210/2/2018 dated 30-05-2018

Clarification in GST

Entries Corresponding to Entry 25(a) of 25/2012-ST are Sl No. 3 and Sl No. 3(a) of 12/2017-CTR as under:

Cord Blood Banks[Sl No. 73 of 12/2012-CTR]

Services provided by the cord blood banks by way of preservation of stem cells or any other service in relation to such preservation.

18%
Heading 9994

(i) Services by way of treatment of effluents by a Common Effluent Treatment Plant.

12%
(i) Sewage and waste collection, treatment and disposal and other environmental protection services , other than (i) above

Exemption

Bio Medical Waste Treatment [Sl No. 75 of 12/2012-CTR]

Services provided by operators of the common bio-medical waste treatment facility to a clinical establishment by way of treatment or disposal of bio-medical waste or the processes incidental thereto.

Public Conveniences [Sl No. 76 of 12/2012-CTR]

Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets.

18%
Heading 9995 Services of membership organizations.

Exemption for members’ Associations

Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution –

(a) as a trade union;

(b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or

(c) up to an amount of five thousand seven thousand five hundred [Substituted by 2/2018-CTR dated 25-1-18]rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex.

[Sl No. 77 of 12/2012-CTR]

Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, engaged in

(i) activities relating to the welfare of industrial or agricultural labour or farmers; or

(ii) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment,

to its own members against consideration in the form of membership fee up to an amount of one thousand rupees (Rs 1000/-) per member per year.

[Sl No. 77A of 12/2012-CTR inserted by 14/2018-CTR dated 26-7-18]

Services provided by RWA (Resident Welfare Association) / Housing Society [Press Release No. 76 dated 13-07-2017]

There are some press reports that services provided by a Housing Society [Resident Welfare Association (RWA)] will become expensive under GST. These are completely unsubstantiated.

2. It may be mentioned that supply of service by RWA (unincorporated body or a registered non- profit entity) to its own members by way of reimbursement of charges or share of contribution up to an amount of five thousand rupees per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.

3. Further, if the aggregate turnover of such RWA is upto Rs.20 Lakh in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs. five thousand.

4. RWA shall be required to pay GST on monthly subscription/contribution charged from its members if such subscription is more than Rs. 5000 per member and the annual turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more. Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services. ITC of Central Excise and VAT paid on goods and capital goods was not available in the pre-GST period and these were a cost to the RWA.

5. Thus, there is no change made to services provided by the Housing Society (RWA) to its members in the GST era.

Recommendations made by the GST Council in its 25th Meeting held on 18th January, 2018 at Delhi for granting relief from GST on services provided by Resident Welfare Associations to their members[Press Release No. 135 dated 18-01-2018]

In the meeting held on 18th January, 2018, the GST Council has recommended several measures granting relief from GST on a number of goods and services. One of the important reliefs granted by the Council is to enhance the limit of contribution made by members of a Resident Welfare Association for the purpose of exemption from GST.

Services provided by Resident Welfare Associations (unincorporated body or a registered non-profit entity) to their members were hitherto exempt against contribution of up to an amount of five thousand rupees per month per member. Requests were received from several quarters to

enhance the contribution limit of five thousand rupees per month per member for exemption.

The Council has recommended that the limit may be enhanced to Rs 7500/- per month per member. As a result, RWAs shall be required to pay GST on monthly subscription/contribution charged from its members if such subscription is more than Rs. 7500 per member and the annual turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more. Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to ITC in respect of taxes

paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services. ITC of

Central Excise and VAT paid on goods and capital goods was not available in the pre-GST period and these were a cost to the RWA.

The notifications giving effect to the above recommendations of the Council will come into force on 25th January, 2018. Accordingly, from 25 January 2018, the services provided by Resident Welfare Association to its members against contribution of up to an amount of Rs 7500/-

per month per member shall be exempt.

18%
Heading 9996: Recreational, cultural and sporting services

Press Release No. 54 dated 28-05-2017 on Tax Incidence on Entertainment Sector

Taxes on entertainments and amusements (covered by the erstwhile entry 62 of State List of the Constitution) have been subsumed under GST except to the extent of taxes on entertainments and amusements levied by a Panchayat or a Municipality.

2. The rate of GST approved by GST Council on services by way of admission to entertainment events or cinematography films in cinema theatres is 28%. However, the entertainment tax rates in respect of exhibition of cinematography films in theaters/cinema halls, currently levied by States are as high as 100% in some of the States.

3. The rate of entertainment tax on cable TV and Direct-To-Home (DTH) levied by States is in the range of 10%-30% in many States. Apart from this, Service tax is also leviable at the rate of 15%. As against this, the rate of GST approved by GSTCouncil on these services is 18%.

4. The rate of GST approved by GST Council on access to circus, theatre, Indian classical dance including folk dance and drama is 18%ad valorem. Further, the GST Council has approved an exemption upto a consideration for admission ofRs 250 per person. These services currently attract entertainment tax levied by the States.

5. Thus, entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services. Presently, such service providers are not eligible to avail of input credits in respect of VAT paid on domestically procured capital goods& inputs or of Special Additional Duty (SAD) paid on imported capital goods and inputs.Thus, while GST is a value added tax, entertainment tax, presently levied by the States is like a turnover tax.

(i) Services by way of admission or access to circus, Indian classical dance including folk dance, theatrical performance, drama. Or planetarium [Ins by 20/2017]

Exemption for Admission to Circus, Dance, Theatre [Sl No. 81 (a)of 12/2012-CTR]

Services by way of right to admission to-

(a) circus, dance, or theatrical performance including drama or ballet;

(d) planetarium

where the consideration for right to admission to the events or places is not more than Rs 500 per person

[Changes by 2/2018-CTR dtd 25-01-18]

Recommendation made by the GST Council in its 25th Meeting held on 18th January, 2018 at Delhi for granting relief from GST on circus, dance, theatrical performances including drama or dance, award function, pageants, concerts, musical performances, recognised sporting events [Press Release No. 134 dated 18-01-2018]

In the meeting held on 18th January, 2018, the GST Council has recommended several measures granting relief from GST on a number of goods and services. In one of the important recommendations, the Council has recommended that the threshold limit on price of admission ticket for the purpose of GST exemption on circus, dance, theatrical performances including drama or dance, award functions, pageants, concerts, musical performances, and recognised sporting events may be increased from Rs. 250 per person to Rs.500 per person. The Council has further recommended that admission to planetarium may also been given the benefit of this threshold exemption upto Rs 500 per person.

The notifications giving effect to the recommendations of the Council will be issued on 25th January, 2018. Accordingly, from the 25 January 2018, admission to circus, dance, theatrical performances including drama or dance, award functions, pageants, concerts, musical performances, recognised sporting events and planetarium upto Rs.500 per person shall be exempt. This measure is expected to promote such cultural and sports events in the country.

18%
(ii) Services by way of admission exhibition of cinematograph films where price of admission ticket is one hundred rupees or less.

Price does not include taxes [Circular 27/2018 dated 04-01-18]

18%
(iii)Services by way of admission to amusement parks including theme parks, water parks, joy rides, merry-go rounds, go-carting and ballet

[Inserted by Notification 1/2018 dated 25-01-2018]

Recommendation made by the GST Council in its 25th Meeting held on 18th January, 2018 at Delhi for reducing GST rate on admission to amusement parks and ballet etc, from 28% to 18%.[Press Release No. 133 dated 18-01-2018]

In the meeting held on 18th January, 2018, the GST Council has recommended reduction of GST rate on services by way of admission to amusement parks including theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet from 28% to 18%. These services hitherto attracted GST @ 28%. Requests were received from several quarters that

amusement parks promote social wellness and beget fun and learning for children and their families in a real active entertainment and therefore, the rate may be reduced to 18%.

The notifications giving effect to the recommendations of the Council will be issued on 25th January, 2018. Accordingly, admission to amusement parks including theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet shall be taxable at the lower rate of 18%.

It is expected and hoped that States do not raise the tax on entertainment and amusement levied by the local authorities (Panchayats/ Municipalities/ District Councils) so as to increase the tax burden on the amusement parks. This will ensure that the rate cut in GST is passed on to children.

Circular 32/2018 dated 12-02-2018

Issue : Whether the services of elephant or camel ride, rickshaw ride and boat ride should be classified under heading 9964 (as passenger transport service) in which case, the rate of tax on such services will be 18% or under the heading 9996 (recreational, cultural and sporting services) treating them as joy rides, leviable to [email protected] 28%?

Clarification: Elephant/ camel joy rides cannot be classified as transportation services. These services will attract GST @ 18% with threshold exemption being available to small service providers. [Sl. No 34(iii) of notification No. 11/2017-CT(Rate) dated 28.06.2017 as amended by notification No.

1/2018-CT(Rate) dated 25.01.2018 refers]

18%
(iiia)Services by way of admission to entertainment events or access to amusement facilities including exhibition of cinematograph films, theme parks, water parks, joy rides, merry-go rounds, go-carting, casinos, race-course, ballet, any sporting event such as Indian Premier League and the like.

Exemption for Admission to Musical and Sporting Events [Sl No. 81 (a)of 12/2012-CTR]

Services by way of right to admission to-

(b) award function, concert, pageant, musical performance or any sporting event other than a recognised sporting event;

(c) recognised sporting event,

where the consideration for right to admission to the events or places is not more than Rs 500 per person

[Changes by 2/2018-CTR dtd 25-01-18]

Exemption for FIFA Cup

Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-17 World Cup 2017 to be hosted in India.
Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 World Cup 2017.”;

[Notification 21/2017 dated 22-8-17]

Exemption provided for Admission to events organized under FIFA U-17 World Cup 2017 {Sl No. 82 of 12/2017-CTR Inserted by 25/2017-CTR dtd 21-9-17]

Exemption for admission to Museum etc. [Sl No. 79 of 12/2012-CTR]

Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo.

Exemption for admission to protected monuments [S.No. 79A of 12/2012-CTR inserted by 47/2017 dated 14-11-17]

Services by way of admission to a protected monument so declared under the Ancient Monuments and Archaeological Sites and Remains Act 1958 (24 of

1958) or any of the State Acts, for the time being in force

28%
(iv) Services provided by a race club by way of totalisator or a license to bookmaker in such club. 28%
(v) Gambling. 28%
Circular No. 27/2018 dated 04-01-2018

Value of Admission to Casino/Gambling

“entry to casinos” and “gambling” are two different services, and GST is leviable at 28% on both these services (14% CGST and 14% SGST) on the value determined as per section 15 of the CGST Act. Thus, GST @ 28% would apply on entry to casinos as well as on betting/ gambling services being provided by casinos on the transaction value of betting, i.e. the total bet value, in addition to GST levy on any other services being provided by the casinos (such as services by way of supply of food/ drinks etc. at the

casinos). Betting, in pre-GST regime, was subjected to betting tax on full bet value.

Value of Admission to Race Course

GST would be leviable on the entire bet value i.e. total of face value of any or all bets paid into the totalisator or placed with licensed book makers, as the case may be. Illustration: If entire bet value is Rs. 100, GST leviable will be Rs. 28/-.

(vi) Recreational, cultural and sporting services other than (i), (ii), (iii),(iiia), (iv) and (v) above. 18%
Exemption for services provided by sportsmen to Recognized Sports body[Sl No. 68 of 12/2012-CTR]

Services provided to a recognised sports body by-

(a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organised by a recognized sports body;

(b) another recognised sports body.

Exemption for Training in Arts, Culture, Sports

Services by way of training or coaching in recreational activities relating to-

(a) arts or culture, or

(b) sports by charitable entities registered under section 12AA of the Income-tax Act.

Performaces(folk or classical) by artists charging not more than Rs. 1,50,000

Services by an artist by way of a performance in folk or classical art forms of-

(a) music, or

(b) dance, or

(c) theatre,

if the consideration charged for such performance is not more than one lakh and fifty thousand rupees:

Provided that the exemption shall not apply to service provided by such artist as a brand ambassador.

“brand ambassador” means a person engaged for promotion or marketing of a brand of goods, service, property or actionable claim, event or endorsement of name, including a trade name, logo or house mark of any person;

Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including services nowhere else classified). 18%
Heading 9998 Domestic services. 18%
Heading 9999 Services provided by extraterritorial organizations and bodies.

Exemption for Foreign Diplomatic Missions

Services by a foreign diplomatic mission located in India are exempt by Sl No. 59 of 12/2012-CTR

18%
Charitable and Religious Activities NIL
Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. [Sl No.1 of 12/2017-CTR]

Para 2(r) “charitable activities” means activities relating to –

(i) public health by way of ,-

(A) care or counseling of

(I) terminally ill persons or persons with severe physical or mental disability;

(II) persons afflicted with HIV or AIDS;

(III) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(B) public awareness of preventive health, family planning or prevention of HIV infection;

(ii) advancement of religion , spirituality or yoga;

Services by a person by way of-

(a) conduct of any religious ceremony [Sl No. 13(a) of 12/2017-CTR]

Exemption for religious pilgrimage [Sl No.60 of 12/2012-CTR]

Services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry of External Affairs, the Government of India, under bilateral arrangement.

Services by a person by way of-

(b) renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) or a trust or an institution registered under sub clause (v) of clause (23C) of section 10 of the Income-tax Act or a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act

“religious place” means a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, or spirituality
“renting in relation to immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;

Provided that nothing contained in entry (b) of this exemption shall apply to,-

(i) renting of rooms where charges are one thousand rupees or more per day;

(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;

(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

[Sl No. 13(b) of 12/2017-CTR]

general public” means the body of people at large sufficiently defined by some common quality of public or impersonal naturegoods transport agency
Services by way of training or coaching in recreational activities relating to-

(b) sports by charitable entities registered under section 12AA of the Income-tax Act. [Sl No. 80 of 12/2017-CTR]

Circular 32/2018 dated 12-02-2018

Issue: Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No. 12/2017-CT (Rate).

Clarification: Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-CT(Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [Sl. No. 14 of notification No. 12/2017-CT(Rate) refers]

Press Release No. 77 on Lodging in Hostels dated 13-07-2017

There are some reports that [email protected]% will be levied on annual subscription/fees charged for lodging in hostels. This is not true. There is no change in tax liability relating to education and related services in the GST era, except reduction in tax rate on certain items of education.

2. It may be mentioned that services provided by an educational institution to students, faculty and staff are fully exempt. Educational institution has been defined as an institution imparting

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course.

3. Thus, services of lodging/boarding in hostels provided by such educational institutions which are providing pre-school education and education up to higher secondary school or equivalent or education leading to a qualification recognised by law, are fully exempt from GST. Annual subscription/fees charged as lodging/boarding charges by such educational institutions from its students for hostel accommodation shall not attract GST.

Transfer of business [Sl No. 2 of 12/2017-CTR]

Services by way of transfer of a going concern,

Ø as a whole or

Ø an independent part thereof.

NIL

Services Provided by Government/Governmental Authority

Services Provided by Government/Governmental Authority

As per Explanation to Section 2(16) of IGST, the expression “governmental authority” means an authority or a board or any other body,––

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government,

with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;

NIL
Service by Government and Govt Authority for Municipality Function[Sl No. 4 of 12/2017-CTR]

Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution

[Changes made by 14/2018 dated 26-7-18]

NIL
Service by Govt Auth for Panchyat functions[Sl No. 5 of 12/2017-CTR]

Services by Central Government, State Government, Union territory, local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution.

[Changes made by 14/2018 dated 26-7-18]

Also neither treated as supply of goods nor supply of services

Services by way of any activity in relation to a function entrusted a) to a Panchayat under article 243G of the Constitution or

b) to a Municipality under article 243W of the Constitution undertaken by the Central Government or State Government or any local authority or Union territory in which they are engaged as public authority, shall be treated neither as a supply of goods nor a supply of service, [Notification 14/2017-CTR & 16/2018-CTR dated 26-7-18] and have been notified u/s 7(2)

NIL
All services by Government excluding specified services[Sl No. 6 of 12/2017-CTR]

Services by the Central Government, State Government, Union territory or local authority excluding the following services

(a) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;

(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(c) transport of goods or passengers; or

(d) any service, other than services covered under entries (a) to (c) above, provided to business entities.

Further reverse charge is applicable as per Sl No. 5 of 13/2017-CTR for following services provided to business entity located in taxable territory by Central Government, State Government, Union territory or local authority excluding :

1. Renting of Immovable Property and

2. Specified Services

(a) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;

(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(c) transport of goods or passengers; or

Meaning of Renting of Immovable Property [Inserted by 15/2018-CTR dated 26-7-18]

“renting of immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property

Reverse Charge is applicable as per Sl No. 5A inserted by 3/2018-CTR dated 25-01-2018 for

Ø Services supplied by the Central Government, State Government, Union territory or local authority

Ø by way of renting of immovable property

Ø to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017)

and hence tax on renting of immovable property by government shall be paid by the person registered under CGST

NIL
Service by Government to small business entities [Sl No. 7 of 12/2017-CTR]

Services provided by the Central Government, State Government, Union territory or local authority to a business entity with an aggregate turnover of up to twenty lakh rupees (ten lakh rupees in case of a special category state) in the preceding financial year.

Explanation.- For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not be applicable to-

(a) services,-

(i) by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;

(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(ii) of transport of goods or passengers; and

(b) services by way of renting of immovable property

“business entity” means any person carrying out business

Where services are provided to business entity having turnover more than 20 lacs, then tax is payable on reverse charge basis except for

1. Renting of Immovable Porperty

2. Specified services as above.

[Sl No, 5 of 13/2017 dated 28-06-2017]

Further Reverse Charge is applicable as per Sl No. 5A has been inserted by 3/2018-CTR dated 25-01-2018 in Notification 13/2017 for

Ø Services supplied by the Central Government, State Government, Union territory or local authority

Ø by way of renting of immovable property

Ø to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017)

and hence tax on renting of immovable property by government shall be paid by the person registered under CGST

NIL
Inter Government Services [Sl No.8 of 12/2017-CTR]

Services provided by the Central Government, State Government, Union territory or local authority to another Central Government, State Government, Union territory or local authority:

Provided that nothing contained in this entry shall apply to services-

(i) by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;

(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) of transport of goods or passengers.

NIL
Service by Government up to Rs. 5000/-[Sl No. 9 of 12/2017-CTR]

Services provided by Central Government, State Government, Union territory or a local authority where the consideration for such services does not exceed five thousand rupees:

Provided that nothing contained in this entry shall apply to-

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;

(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) transport of goods or passengers:

Provided further that in case where continuous supply of service, as defined in sub-section (33) of section 2 of the Central Goods and Services Tax Act, 2017, is provided by the Central Government, State Government, Union territory or a local authority, the exemption shall apply only where the consideration charged for such service does not exceed five thousand rupees in a financial year.

NIL
Services by RBI [S.No. 26 of 12/2017] Nil
Long Term lease of Industrial Plots [S.No. 41 of 12/2017-CTR]

One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units.

NIL
License fee for Telecom Operator [SL NO. 42 OF 12/2017-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the period prior to the 1st April, 2016, on payment of licence fee or spectrum user charges, as the case may be

“business entity” means any person carrying out business
NIL
Registration Services and Testing & Certification Service for Workers/Consumers/Public

Services provided by the Central Government, State Government, Union territory or local authority by way of-

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.

Service by GSTIN[ Sl no. 51 of 12/2012]

Services provided by the Goods and Services Tax Network to the Central Government or State Governments or Union territories for implementation of Goods and Services Tax.

Exemption for Cold Chain Knowledge by National Centre [Sl No. 58 of 12/2017-CTR]

Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination

Exemption for passport, visa, driving license, death, birth certificates [Sl No.61 of 12/2012-CTR]

14.Services provided by the Central Government, State Government, Union territory or local authority by way of issuance of passport, visa, driving licence, birth certificate or death certificate

Fines and Liquidated Damaged imposed by Government[Sl No.62 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Central Government, State Government, Union territory or local authority under such contract.

Right to cultivate and Rearing to Individual farmers[Sl No.63 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products.

Right to Use Natural Resources for One time charges assigned before 01-04-06[Sl No.64 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory or local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Central Government, State Government, Union territory or local authority before the 1st April, 2016:

Provided that the exemption shall apply only to tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource.

Merchant Overtime Charges[Sl No.65 of 12/2012-CTR]

Services provided by the Central Government, State Government, Union territory by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges.

Grants received from Government [Sl No. 9C of 12/2017]

Supply of service by a Government Entity to Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants.

Notification 32/2017 dtd 13-10-17

Old Age Home run by Government or 12AA Entity [Sl No. 9D inserted by 14/2018-CTR dated 26-7-18]

Ø Services by an old age home run by

Ø Central Government, State Government or

Ø by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961)

Ø to its residents (aged 60 years or more)

Ø against consideration upto twenty-five thousand rupees per month per member,

Ø provided that the consideration charged is inclusive of charges for boarding, lodging and maintenance

Exemption on Import of Service by SEZ Unit/Developer

Services imported by a unit or a developer in the Special Economic Zone for authorised operations, have been exempted from the whole of the integrated tax by Notification 18/2017-IGST(Rate) dated 5-7-2017

Reverse Charge on Import of Service [Sl No. 1 of 10/2017-IGST(Rate)

Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient to Any person located in the taxable territory other than non-taxable online recipient.

Reverse Charge on Importer located in taxable territory for Ocean Freight Service before customs clearance [Sl No. 10 of 10/2017-IGST (rate) dated 28-06-2017

Services supplied by a person located in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India to Importer as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory.

Exemption on Import of Service by SEZ [Notification No. 18/2017-IGST(Rate)

Services imported by a unit or a developer in the Special Economic Zone for authorised operations, from the whole of the integrated tax leviable thereon under section 5 of the Integrated Goods and Service Tax Act, 2017 (13 of 2017) have been exempted in exercise of powers conferred u/s 6(1) of IGST Act

Joint Venture —taxable services provided by the members of the Joint

Venture (JV) to the JV and vice versa and inter se between the members of the JV

CBEC vide Circular No.179/5/2014 – ST issued from F.No. 179/5/2014-ST dated 24 September 2014 had clarified that if cash calls are merely transaction in money, then they are excluded from the definition of service provided in Section 65B (44) of the Finance Act, 1994. Whether a cash call is merely a transaction in money and hence not in the nature of consideration for taxable service, would depend on the terms of the Joint Venture Agreement, which may vary from case to case. The Circular clarified that cash calls, sometimes, could be in the nature of advance payments made by members towards taxable services received from joint venture(JV); and that payments made out of cash calls pooled by a JV towards taxable services received from a member or a third party is in the nature of consideration and hence attracts Service Tax. The Circular further stated that JV being an unincorporated temporary association constituted for the limited purpose of carrying out a specified project within a time frame, a comprehensive examination of the various JV agreements (at times, there could be number of inter se agreements between members of the JV) holds the key to understanding of the taxation of transactions involving taxable services between the JV and its members or inter-se between the members of a JV. Therefore, officers in the field formations were advised to carefully examine the leviability of service tax with reference to the specific terms/clauses of each JV agreement.

In the Service Tax Law, service was defined as an activity carried out by a person for another for consideration [Section 65B(44) of the Finance Act 1994]. Explanation 3 to the said definition stated than an unincorporated association or a body of persons as the case may be, and a member thereof shall be treated as distinct persons.

GST is levied on intra-State and inter-State supply of goods and services. According to section 7 of CGST Act, 2017, the expression “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, and includes activities specified in Schedule II to the CGST Act, 2017. The definition of “business” in section 2(17) of CGST Act states that “business” includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. The term person is defined in section 2(84) of the CGST Act, 2017 to include an association of persons or a body of individuals, whether incorporated or not, in India or outside India. Further, Schedule II of CGST Act, 2017 enumerates activities which are to be treated as supply of goods or as supply of services. It states in para 7 that supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of goods. A conjoint reading of the above provisions of the law implies that supply of services by an unincorporated association or body of persons (AOP) to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of services. The above entry in Schedule II is analogous to and draws strength from the provision in Article 366(29A)(e) of the Constitution according to which a tax on the sale or purchase of goods includes a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

Therefore, the law with regard to levy of GST on service supplied by member of an unincorporated joint venture (JV) to the JV or to other members of the JV, or by JV to the members, essentially remains the same as it was under service tax law. Thus, it is clarified that the clarification given vide Board Circular No. 179/5/2014 – ST dated 24.09.2014 ibid in the context of service tax is applicable for the purpose of levy of GST also. It is reiterated that the question whether cash calls are taxable or not will entirely depend on the facts and circumstances of each case. Cash calls’ are raised by an operating member of the joint venture on other members in proportion to their participating interests in the joint venture(unincorporated) to meet the expenditure on the operations to be carried out as per the approved work programme and budget. Taxability of cash calls can be further explained by the following illustrations:

Illustration A: There are 4 members in the JV including the operating member and each one contributes Rs 100 as part of their share. A total amount of Rs 400 is collected. The operating member purchases machinery for Rs 400 for the JV to be used in oil production.

Illustration B: There are 4 members in the JV including the operating member and each one contributes Rs 100 as part of their share. A total amount of Rs 400 is collected. The operating member thereafter uses its own machine and performs exploration and production activities on behalf of the JV.

Illustration A will not be the subject matter of ‘ST/GST’ for the reason that the operating member is not carrying out an activity for another for consideration. In Illustration A, the money paid for purchase of machinery is merely in the nature of capital contribution and is therefore a transaction in money

On the other hand, in Illustration B, the operating member uses its own machinery and is therefore providing ‘service’ within the scope of supply of CGST Act, 2017. This is because in this scenario, the operating member is recovering the cost appropriated towards machinery and services from the other JV members in their participating interest ratio.

[Circular 35/2018 dated 05-03-2018]

Jurisdiction for OIDAR Services provided to non taxable recipient by person in Non taxable territory [2/2017 IGST-19-06-2017]]

Principal Commissioner of Central Tax, Bengaluru West and all the officers subordinate to him shall be the officers empowered to grant registration in case of online information and database access or retrieval services provided or agreed to be provided by a person located in non-taxable territory and received by a non-taxable online recipient.

Explanation.- For the purposes of this notification,-

(a) “online information and database access or retrieval services” has the same meaning as assigned to it in sub-section (17) of section 2 of the said Act;

(b) “non-taxable online recipient” has the same meaning as assigned to it in sub-section (16) of section 2 of the said Act.

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5 Comments

  1. BNNVVS VIJAYKUMAR says:

    Excelllent work and clear analysis of GST impact on various goods and services Mr. Vinamar gi. Thank You for the pain you have taken in this aspect.

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