Comprehensive E book : GST on Services

Goods

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.

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

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)

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.

(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:

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.

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

Export/Import of services

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:

[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.

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]

Date of Issue of Invoice BY SUPPLIER

OR

Date of Receipt of Payment

Date of Provision of service

OR

Date of Receipt of Payment

“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

(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;

(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.

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

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

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

[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.

(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:

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

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.

– 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.

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 1/3^rd 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 30^th 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.

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)]

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)

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;

(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);’;

(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

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;

(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

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 1/3^rd 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

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;

(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.

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 1/3^rd 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

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)

(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

(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.

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)

(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.

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.

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]

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

Maintenance, repair and installation (except 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

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

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

Covers:

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.

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

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

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]

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

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

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

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

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

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]

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.

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

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.

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.

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

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]

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]

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.

[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.

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]

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

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

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%.

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.

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

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.

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.

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)

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

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

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

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.

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]

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”

12%

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

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.

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).

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 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

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%

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

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

– 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.

Also there is no restriction on the use of ITC.

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 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.

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.

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

[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.

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]

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.

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

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 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

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 tax@12% 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.

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]

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, 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]

Where ITC is taken

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

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]

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]

Covers

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]

Exemption in Financial and Related Services

1.Services by the Reserve Bank of India .

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]

(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]

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).

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]

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.

[Sl No. 15(ii) 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].

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.

[Sl No. 16(iii)]

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

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

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

[Sl No. 17(iii) of 11/2017]

[Sl No. 17(iv) of 11/2017]

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.

Note:- Nothing contained in this entry shall apply on or after 1st July, 2020.

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]

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.

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

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]

(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

(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.

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)

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 GST@ 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.

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

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.

(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]

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.

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.

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]

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]

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

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;

(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]

(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]

Housekeeping services not provided through E-Commerce operator shall be taxable @ 18%

(Manufacturing services on physical inputs (goods) owned by others)

“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)]

[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.

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]

[Inserted by 1/2018-CTR dated 25-01-18]

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.

(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]

(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]

[Notification 1/2018-CTR dated 25-01-2018]

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.

(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]

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]

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]

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.

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.

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

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.

(i) Services by way of treatment of effluents by a Common Effluent Treatment Plant.

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.

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]

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.

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 25^th 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.

Price does not include taxes [Circular 27/2018 dated 04-01-18]

[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 GST@ 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]

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

[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

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/-.

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;

Exemption for Foreign Diplomatic Missions

Services by a foreign diplomatic mission located in India are exempt by Sl No. 59 of 12/2012-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;

(a) conduct of any religious ceremony [Sl No. 13(a) of 12/2017-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.

(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]

(b) sports by charitable entities registered under section 12AA of the Income-tax Act. [Sl No. 80 of 12/2017-CTR]

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 GST@18% 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.

Services by way of transfer of a going concern,

Ø as a whole or

Ø an independent part thereof.

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;

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]

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)

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.

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

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

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.

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.

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.

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

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.

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.

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

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

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.

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.

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.

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.

Notification 32/2017 dtd 13-10-17

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

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]