CBIC Exempts IGST on Railway & Accommodation Services

In a significant move aimed at streamlining tax regulations and providing relief to public services, the Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 04/2024-Integrated Tax (Rate), dated July 12, 2024. This notification exempts Integrated Goods and Services Tax (IGST) on various services provided by Indian Railways and Special Purpose Vehicles (SPVs). Effective from July 15, 2024, this decision aligns with the recommendations of the 53rd GST Council meeting, addressing both present and past tax implications for these services.

Exemptions for Indian Railways

The notification exempts IGST on several services provided by Indian Railways to the general public. These services include:

1. Sale of Platform Tickets: Passengers can now purchase platform tickets without the burden of IGST, making it more affordable to access railway platforms for non-travel purposes.

2. Facilities of Retiring Rooms/Waiting Rooms: The exemption extends to the use of retiring rooms and waiting rooms, providing cost-effective rest areas for travelers.

3. Cloak Room Services: The cloakroom facilities, where passengers can store their luggage securely, will also be free from IGST.

4. Battery-Operated Car Services: These services, typically used by elderly or differently-abled passengers for intra-station transportation, will not attract IGST.

Additionally, intra-Railway transactions, where services are provided by one zone or division of Indian Railways to another, are exempted from IGST. This exemption is aimed at reducing the administrative burden and fostering operational efficiency within the railway network.

Regularization of Past Issues

The notification also addresses the regularization of IGST issues for the past period, specifically from October 20, 2023, to the date of issuance of the exemption notification. This provision ensures that any IGST-related discrepancies during this period are resolved, providing clarity and relief to the concerned parties.

Exemptions for SPVs and Indian Railways

The notification exempts GST on services provided by SPVs to Indian Railways. This includes:

1. Use of Infrastructure: SPVs that allow Indian Railways to use infrastructure built and owned by them during the concession period are exempt from IGST. This exemption applies to the consideration received by SPVs for this usage.

2. Maintenance Services: Maintenance services supplied by Indian Railways to SPVs in relation to the said infrastructure are also exempt from IGST. This ensures seamless operation and upkeep of railway infrastructure without additional tax burdens.

For the past period, from July 1, 2017, to the date of issuance of the exemption notification, the issues will be regularized on an ‘as is where is’ basis. This retrospective regularization aims to resolve any outstanding tax issues and provide a clean slate for future operations.

Accommodation Services Exemption

A notable inclusion in this notification is the exemption for accommodation services. Specifically, services with a value of supply up to Rs. 20,000 per month per person are exempted, provided the accommodation is supplied for a minimum continuous period of 90 days. This exemption benefits:

1. Long-term Accommodation: Individuals seeking long-term stays in hostels, camps, and paying guest accommodations can avail of this exemption, significantly reducing their lodging costs.

2. Students and Workers: Although services for student residences and certain other accommodations are explicitly excluded, this exemption still provides substantial relief for various other long-term accommodations.

The CBIC’s Notification No. 04/2024-Integrated Tax (Rate) marks a pivotal step in easing the tax burden on essential public services and infrastructure development. By exempting IGST on specific services provided by Indian Railways and SPVs, and addressing past tax issues, this notification aligns with the government’s goal of simplifying tax compliance and supporting the efficient functioning of vital services.

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MINISTRY OF FINANCE
(Department of Revenue)
New Delhi

Notification  No. 04/2024- Integrated Tax (Rate) | Dated: 12th July, 2024

G.S.R. 389(E).— In exercise of the powers conferred by sub-section (3) and sub-section (4) of section 5, sub-section (1) of section 6 and clause (xxv) of section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), read with sub-section (5) of section 15 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following amendments further to amend in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.9/2017-Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3,Sub-section (i) vide number G.S.R. 684 (E), dated the 28th June, 2017, namely:-

In the said notification, in the Table, –

(A) after serial number 10H and the entries relating thereto, the following serial numbers and entries shall be inserted, namely: –

(B) in serial number 13, –

(i) in column (2), the words and figures “Heading 9963 or” shall be omitted;

(ii) in column (3), the Explanation shall be numbered as Explanation 1 thereof, and after Explanation 1 so re­numbered, the following Explanation shall be inserted, namely: –

“Explanation 2.- Nothing contained in this entry shall apply to-

(a) accommodation services for students in student residences;

(b) accommodation services provided by Hostels, Camps, Paying Guest accommodations and the like.”;

(C) after serial number 13 and the entries relating thereto, the following serial number and entries shall be inserted, namely: –

2. This notification shall come into force with effect from the 15^th day of July, 2024.

[F.No. CBIC-190354/94/2024-TO(TRU-II)-CBEC]
Dr. PUNEETA BEDI, Director

Note: The principal notification was published in the Gazette of India, Extraordinary, vide notification no. 9/2017 – Integrated Tax (Rate), dated the 28^th June, 2017, vide number G.S.R. 684 (E), dated the 28th June, 2017 and last amended vide notification no. 16/2023 – Integrated Tax (Rate), dated the 19^th October, 2023 published in the official gazette vide number G.S.R. 763(E), dated the 19^th October, 2023.