Compilation of notifications, circulars and advisories issued recently in GST post 52nd GST Council Meeting
This article provides a comprehensive compilation of the latest notifications, circulars, and amendments in the Goods and Services Tax (GST) regime following the 52nd GST Council Meeting in October 2023. Stay informed about important changes in the GST landscape.
1. Corporate & Personal Guarantees
(i) CBIC prescribes valuation of inter-corporate guarantee provided to banking company or financial institution
CBIC has notified Central Goods and Services Tax (Fourth Amendment) Rules, 2023. In this rules, it has been provided that the value of supply of services by a supplier to a recipient who is a related person, by way of providing corporate guarantee to any banking company or financial institution on behalf of the said recipient, shall be deemed to be 1% of the amount of such guarantee offered, or the actual consideration, whichever is higher.
(Notification No. 52/2023-Central Tax dated October 26th, 2023)
(ii) CBIC clarifies on issues pertaining to taxability of personal guarantee and corporate guarantee in GST
CBIC has clarified that the activity of providing corporate guarantee or personal guarantee by a related person/ holding company/ Director to the banks/ financial institutions for securing credit facilities for their companies is to be treated as a supply of service, even when made without consideration. It is also clarified that the taxable value of such supply of service shall be the open market value of such supply. However since RBI does not permit payment of any consideration by way of commission, brokerage fees or any other form, to the director by the company, directly or indirectly, in lieu of providing personal guarantee to the bank for borrowing credit limits, there is no question of any open market value. Thus no tax is payable on such supply of service by the director to the company. However in cases where the personal guarantee of a Director continues even after he is no more a Director, the taxable value of such supply of service shall be the remuneration/ consideration provided to such a person/ guarantor by the company, directly or indirectly. In case of corporate guarantees, the taxable value shall be determined as per the provisions of the sub-rule (2) of Rule 28 of CGST Rules, irrespective of whether full ITC is available to the recipient of services or not. Sub-rule (2) of Rule 28 prescribes the value as one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.
(Circular No. 204/16/2023-GST dated October 27th, 2023)
2. Provisional attachment
(i) Order of provisional attachment shall cease to have any effect after expiry of period of 1 year
CBIC has notified Central Goods and Services Tax (Fourth Amendment) Rules, 2023 in which it has been provided that the provisional attachment order shall cease to have any effect after expiry of period of 1 year from date of order.
(Notification No. 52/2023-Central Tax dated October 26th, 2023)
3. GST Registration
(i) Amendment in GST Registration Form REG 01 to include One Person Company as an entity for registration
CBIC has notified Central Goods and Services Tax (Fourth Amendment) Rules, 2023 in which it has been provided that in GST Registration Form REG 01, the option to choose the applicant as One Person Company shall be inserted.
(Notification No. 52/2023-Central Tax dated October 26th, 2023)
4. Supplies made to SEZ units/ developers
(i) CBIC issues notification to allow supplies made to SEZ units/ developers on payment of IGST
CBIC has issued a notification to provide that now suppliers can make supply of goods & services on payment of IGST option to SEZ units/ developers as well. Earlier, the Government has notified goods and services which can be exported with payment of IGST except supply of Tobacco, Pan Masala, and other similar products where refund will only be available through the Bond/ Letter of Undertaking (LUT) route. Also, the notification didn’t cover supplies made to SEZ units and developers.
Now, it has been notified that all the goods and services, except for the specified tobacco and similar products, can continue to be supplied to SEZ units or Developer either with or without payment of IGST. However, for the specified products, the option to supply with payment of tax and claim IGST refund has been withdrawn.
(Notification No. 05/2023 –Integrated Tax dated October 26th, 2023)
5. GST Appellate Tribunal
(i) Government notifies GST Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023
The Ministry of Finance has issued a notification to notify Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023. These rules shall apply to the President, Judicial Member, Technical Member (Centre) and Technical Member (State) of the Principal Bench and State Bench of Goods and Services Tax Appellate Tribunal.
(Notification No. G.S.R. 793(E) [F. No A-50050/69/2023-CESTAT-DOR] dated October 25th, 2023)
6. Admissibility of export remittances
(i) Clarification regarding admissibility of export remittances received in Special INR Vostro account
CBIC has clarified that when the Indian exporters, undertaking export of services, are paid the export proceeds in INR from the Special Rupee Vostro Accounts of correspondent bank(s) of the partner trading country, opened by AD banks, the same shall be considered to be fulfilling the conditions of sub-clause (iv) of clause (6) of section 2 of IGST Act, 2017, subject to the conditions/ restrictions mentioned in Foreign Trade Policy, 2023 & extant RBI Circulars and without prejudice to the permissions / approvals, if any, required under any other law .
(Circular No. 202/14/2023-GST dated October 27th, 2023)
7. Clarifications w.r.t. place of supply
(i) CBIC issues clarification regarding determination of POS for services of transportation of goods, including through mail and courier
CBIC has clarified that the place of supply of services of transportation of goods, other than through mail and courier, in cases where location of supplier of services or location of recipient of services is outside India, will be determined by the default rule under section 13(2) of IGST Act and not as performance based services under sub-section (3) of section 13 of IGST Act. Accordingly, in cases where location of recipient of services is available, the place of supply of such services shall be the location of recipient of services and in cases where location of recipient of services is not available in the ordinary course of business, the place of supply shall be the location of supplier of services.
Further the place of supply in case of service of transportation of goods by mail or courier will continue to be determined by the default rule under section 13(2) of IGST Act i.e. in cases where location of recipient of services is available, the place of supply of such services shall be the location of recipient of services and in cases where location of recipient of services is not available in the ordinary course of business, the place of supply shall be the location of supplier of services.
(Circular No. 203/15/2023-GST dated October 27th, 2023)
(ii) CBIC issues clarification regarding determination of place of supply in case of supply of services in respect of advertising sector
CBIC has clarified that the place of supply of service provided by way of sale of space on hoarding/ structure for advertising or for grant of rights to use the hoarding/ structure for advertising would be the location where such hoarding/ structure is located. It has also been clarified that where the vendor is responsible for display of the advertisement and the advertising company is not occupying the space or the structure, the said service does not amount to sale of advertising space or supply by way of grant of rights to use immovable property and the place of supply in such cases shall be determined in terms of Section 12(2) of IGST Act.
(Circular No. 203/15/2023-GST dated October 27th, 2023)
(iii) CBIC issues clarification regarding determination of place of supply in case of supply of “co-location services
CBIC has clarified that Co-location services are in the nature of “Hosting and information technology (IT) infrastructure provisioning services” and not “renting of immovable property service”. Accordingly the place of supply of the co-location services shall be determined in terms of Section 12(2) of IGST Act i.e. location of recipient of co-location service. However in case where the terms of agreement is restricted only to providing physical space without any IT support, the place of supply shall be determined by the provisions of clause (a) of sub-section (3) of Section 12 of the IGST Act which is the location where the immovable property is located.
(Circular No. 203/15/2023-GST dated October 27th, 2023)
8. GST rate notifications
The Government has issued rate notifications for the changes in rates pursuant to decision taken in the 52nd GST Council meeting. All the below-mentioned Notifications shall have effect from 20th October, 2023. Similar notifications have been issued under IGST Act as well as UTGST Acts. The rate changes are as follows:
(i) Amendment in Notification No. 11/2017-CT(R) dt. 28.06.2017 – Rates for supply of services
a. A condition has been introduced for taking input tax credit on input services in the same line of business in case of Passenger Transport Services and Rental services of transport vehicles with operators, restricting it to 2.5%, where the supplier of input service in the same line of business charges central tax at a rate higher than 2.5%.
b. In case of services provided by a race club, the word ‘totalisator or a license to’ a bookmaker has been replaced with ‘licensing a’ bookmaker.
c. The entry related to ‘Gambling’ has been omitted. Consequently, entries related to ‘Gambling and betting services including similar online services’ and ‘Lottery services’ in the scheme of classification of services has also been omitted.
(Notification No. 12/2023-CT(R) dt. 19.10.2023)
(ii) Amendment in Notification No. 12/2017-CT(R) dt. 28.06.2017 – Services exempt from levy of GST
a. Services provided to a Governmental Authority by way of water supply, public health, sanitation and conservancy, solid waste management and slum improvement and upgradation have been exempted from levy of GST.
(Notification No. 13/2023-CT(R) dt. 19.10.2023)
(iii) Amendment in Notification No. 12/2017-CT(R) dt. 28.06.2017 – Services exempt from levy of GST and Notification No. 13/2017-CT(R) dt. 28.06.2017 – Services leviable to reverse charge under GST
a. Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC.
(Notification No. 13/2023-CT(R) dt. 19.10.2023) and (Notification No. 14/2023-CT(R) dt. 19.10.2023)
(iv) Amendment in Notification No. 15/2017-CT(R) dt. 28.06.2017 – No refund of unutilised input tax credit u/s 54(3) in case of supply of certain service
a. As per Notification No. 15/2017-CT(R) dt. 28.06.2017, no refund of unutilised input tax credit shall be allowed under sub-section (3) of section 54 in case of supply of services specified in sub-item (b) of item 5 of Schedule II. Now the said notification has been amended and the words ‘specified in sub-item (b) of item 5 of Schedule II’ has been substituted with the words ‘of construction of a complex, building or a part thereof, intended for sale to a buyer, wholly or partly, where the amount charged from the recipient of service includes the value of land or undivided share of land, as the case may be, 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”.
(Notification No. 15/2023-CT(R) dt. 19.10.2023)
(v) Amendment in Notification No. 17/2017-CT(R) dt. 28.06.2023 – Services on which tax shall be paid by E-Commerce Operator (ECO)
a. Notification No. 17/2017-CT(R) dt. 28.06.2023 has been amended to provide that GST in case of services by way of transportation of passengers provided through Omnibus shall be paid by the ECO except where the supplier supplying such service through the ECO is a Company. (‘Company’ shall have the same meaning as assigned to it in section 2(20) of the Companies Act, 2013.)
(Notification No. 16/2023-CT(R) dt. 19.10.2023)
(vi) Amendment in Notification No. 1/2017- CT (R) dt. 28.06.2017 – CGST rate schedule for goods
a. GST rate on molasses has been reduced from 14% to 2.5%.
b. Spirits for industrial use has been made taxable at the rate of 9%.
(Notification No. 17/2023-CT (R) dt. 19.10.2023)
(vii) Amendment in Notification No. 2/2017- CT (R) dt. 28.06.2017 – Power to grant exemption from tax and Notification No. 1/2017- CT (R) dt. 28.06.2017 – CGST rate schedule for goods.
Taxability of “Food preparation of millet flour in powder form, containing at least 70% millets by weight” has been amended as follows:
a. other than pre-packaged and labelled form – 0% (Notification No. 18/2023-CT (R) dt. 19.10.2023)
b. pre-packaged and labelled form – 2.5% (Notification No. 17/2023-CT (R) dt. 19.10.2023)
(viii) Amendment in Notification No. 4/2017-CT(R) dt. 28.06.2017 – Reverse charge on certain specified supplies of goods
a. As per the amended Notification No. 4/2017-CT(R) dt. 28.06.2017, tax shall be paid under forward charge when used vehicles, seized and confiscated goods, old and used goods, waste and scrap is supplied by Ministry of Railways (Indian Railways) to a registered person.
(Notification No. 19/2023-CT (R) dt. 19.10.2023)
(ix) Amendment in Notification No. 5/2017- CT(R) dt. 28.06.2017 – Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed where rate of tax on input is higher than rate of tax on output supplies of such goods
a. A new entry has been inserted in Notification No. 5/2017- CT(R) dt. 28.06.2017 to provide that no refund of unutilised input tax credit under inverted duty structure shall be allowed in case of supply of imitation zari thread or yarn made out of Metallised polyester film/ plastic film. An explanation has also been inserted providing that this shall apply for refund of input tax credit only on polyester film /plastic film.
(Notification No. 20/2023-CT (R) dt. 19.10.2023)
9. GST practitioners
(i) Eligibility criteria for GST practitioners widened
CBIC has notified Central Goods and Services Tax (Fourth Amendment) Rules, 2023 in which it has been provided that the eligibility criteria of GST practitioners shall be widened.
(Notification No. 52/2023-Central Tax dated October 26th, 2023)
10. Intimation u/r 142(3)
(i) Order u/r 142(3) rechristened as Intimation
CBIC has notified Central Goods and Services Tax (Fourth Amendment) Rules, 2023 in which it has been provided that Rule 142(3) which requires that upon payment of the demand in DRC 03 and issue of acknowledgement in DRC 04 by the proper officer, an Order is required to be issued in DRC 05. The nomenclature of DRC 05 has been changed from Order to Intimation by the said amendment.
(Notification No. 52/2023-Central Tax dated October 26th, 2023))
11. Advisory related to changes in GSTR-5A
(i) GSTN issued an advisory related to changes in GSTR-5A
The GSTN has issued an advisory to inform that Table 5B which is introduced to report supplies made to registered GSTINs (B2B supplies) would be implemented shortly at GSTN Portal and till such time, OIDARs are advised to file the return in the existing GSTR 5A itself.
(GSTN Update dated October 27th, 2023)
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Disclaimer: The views expressed herein are of the author and does not constitute professional advice. Viewers are advised to refer to the original Circular for reference and seek professional assistance for interpreting the Circulars. The author can be contacted at [email protected] or 9830124482 (M).
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