In pursuance to the GST Council 53rd meeting’s recommendations, CBIC has issued the 16 GST circular providing the clarification for concern raised before council. Summary of the same is as below,
1. Circular 207/1/2024: Reduction of Government Litigation – fixing monetary limits for filing appeals or applications by the Department before GSTAT, High Courts and Supreme Court following Limit is prescribed.
| Appellate Forum | Monetary limit for Dept. |
| GSTAT | 20,00,000 |
| High Court | 1,00,00,000 |
| Supreme Court | 2,00,00,000 |
However, the above Monetary Limit shall not be applicable in following cases,
1. Where any provision of the CGST Act or SGST/UTGST Act or IGST Act or GST (Compensation to States) Act has been held to be ultra vires to the Constitution of India; or
2. Where any Rules or regulations made under CGST Act or SGST/UTGST Act or IGST Act or GST (Compensation to States) Act have been held to be ultra vires the parent Act; or
3. Where any order, notification, instruction, or circular issued by the Government or the Board has been held to be ultra vires of the CGST Act or SGST/UTGST Act or IGST Act or GST (Compensation to States) Actor the Rules made thereunder; or
4. Where the matter is related to –
i. Valuation of goods or services; or
ii. Classification of goods or services; or
5. Refunds; or
i. Place of Supply; or
ii. Any other issue,
6. which is recurring in nature and/or involves interpretation of the provisions of the Act /the Rules/ notification/circular/order/instruction etc; or
7. Where strictures/adverse comments have been passed and/or cost has been imposed against the Government/Department or their officers; or
8. Any other case or class of cases, where in the opinion of the Board, it is necessary to contest in the interest of justice or revenue.
2. Circular 208/2/2024: Clarifications on various issues pertaining to special procedure for the manufacturers of the specified commodities as per Notification No. 04/2024 – Central Tax dated 05.01.2024.
1. Non availability of make, model number and machine number as the machine is old–
Reporting of make and model number are optional. However, If the machine number is not available either on the machine or as per the available documents/ records, then the manufacturer may assign any numeric number to the said machine and provide the details in relevant return.
2. Electricity consumption rating of the packing machine is not available in the specifications of the said machine or in the documents/record of the same.
Then the manufacturer may get such electricity consumption per hour of the said machine calculated through a Chartered Engineer and get the same certified by the said Chartered Engineer in the format prescribed and The copy of such certificate of the Chartered Engineer needs to be uploaded along with form.
3. Reporting of MRP in SRM-II in case of goods having no MRP.
Then the sale price of the goods so manufactured shall be entered in Column 8 of Table 9 of FORM GST SRM-II.
4. What should be the qualification and eligibility of the Chartered Engineer for providing Chartered Engineer certificate.
It is clarified that a Practicing Chartered Engineer having a certificate of practice from the Institute of Engineers India (IEI) is qualified to provide Chartered Engineer certificate.
5. Whether the special procedure is applicable to
i. The manufacturing units located in Special Economic Zone (SEZ)?
ii. To the manual processes using electric operated heat sealer and seamer?
It is clarified that the special procedure as notified is not applicable to above categories.
6. In cases where multiple machines are required for filling, capping and packing of containers, the serial number of which machine is required to be declared in Table 6 of FORM GST SRM-I?
It is clarified that in a manufacturing process there may be different machines being used such as one for filling of packages, another for putting seal on the packages and another for final packing. The detail of that machine is required to be reported which is being used for final packing of the packages of the specified goods.
7. In case of job work or contract manufacturing, which person shall be required to comply with the special procedure.
The special procedure shall be applicable to all persons involved in manufacturing process including a job worker / contract manufacturer. However, if the job worker/ contract manufacturer is unregistered, then the liability to comply with the said special procedure will be of the concerned principal manufacturer.
3. Circular 209/3/2024: Clarification on the provisions of clause (ca) of Section 10(1) of the Integrated Goods and Service Tax Act, 2017 relating to place of supply of goods to unregistered persons.
1. In cases involving supply of goods to an unregistered person, where the address of delivery of goods recorded on the invoice is different from the billing address of the said unregistered person on the invoice, the place of supply of goods shall be the address of delivery of goods recorded on the invoice.
2. where the billing address and delivery address are different, the supplier may record the delivery address as the address of the recipient on the invoice for the purpose of determination of place of supply of the said supply of goods.
4. Circular 210/4/2024: Clarification on valuation of supply of import of services by a related person where recipient is eligible to full input tax credit.
In cases where the foreign affiliate is providing certain services to the related domestic entity, and where full input tax credit is available to the said related domestic entity, the value of such supply of services declared in the invoice by the said related domestic entity may be deemed as open market value in terms of second proviso to rule 28(1) of CGST Rules.
Further, in cases where full input tax credit is available to the recipient, if the invoice is not issued by the related domestic entity with respect to any service provided by the foreign affiliate to it, the value of such services may be deemed to be declared as Nil, and may be deemed as open market value in terms of second proviso to rule 28(1) of CGST Rules.
5. Circular 211/ 5/2024: Clarification on time limit under Section 16(4) of CGST Act, 2017 in respect of RCM supplies received from unregistered persons.
In cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under reverse charge mechanism (RCM) and where invoice is to be issued by the recipient of the supplies in accordance with section 31(3)(f) –(Self Invoice)of CGST Act. The relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act will be the financial year in which the invoice has been issued by the recipient under section 31(3)(f) of CGST Act, subject to payment of tax on the said supply by the recipient and fulfilment of other conditions and restrictions of section 16 and 17 of CGST Act.
In case, the recipient issues the invoice after the time of supply of the said supply and pays tax accordingly, he will be required to pay interest on such delayed payment of tax. Further, in cases of such delayed issuance of invoice by the recipient, he may also be liable to penal action under the provisions of Section 122 of CGST Act.
6. Circular 212/6/2024: Mechanism for providing evidence of compliance of conditions of Section 15(3)(b)(ii) –Post sale Discount of the CGST Act, 2017 by the suppliers.
Till the time a functionality/ facility is made available on the common portal to enable the suppliers as well as the tax officers to verify whether the input tax credit attributable to such discounts offered through tax credit notes has been reversed by the recipient or not, the supplier may procure a certificate from the recipient of supply,
1. In cases, where the amount of tax (CGST+SGST+IGST and including compensation cess, if any) involved in the discount given by the supplier to a recipient through tax credit notes in a Financial Year is not exceeding Rs 5,00,000, the said supplier may procure an undertaking/ certificate from the said recipient that the said input tax credit attributable to such discount has been reversed by him.
2. In cases, where the amount of tax amount is more than 5,00,000, then the certificate shall be issued by the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that the recipient has made the required proportionate reversal of input tax credit at his end in respect of such credit note issued by the supplier. Such certificate issued by CA or CMA shall contain UDIN (Unique Document Identification Number).
7. Circular 213/7/2024: Clarification on the taxability of ESOP/ESPP/RSU provided by a company to its employees through its overseas holding company.
The Indian companies provide the option to their employees for allotment of securities/shares of their foreign holding company as part of the compensation package as per terms of contract of employment. on exercising the option by the employees of Indian subsidiary company, the securities/shares of foreign holding company are allotted directly by the holding company to the concerned employees of Indian subsidiary company, and the cost of such securities/shares is generally reimbursed by the subsidiary company to the holding company.
It is clarified that no supply of service appears to be taking place between the foreign holding company and the domestic subsidiary company where the foreign holding company issues ESOP/ESPP/RSU to the employees of domestic subsidiary company, and the domestic subsidiary company reimburses the cost of such securities/shares to the foreign holding company on cost-to-cost basis.
However, in cases where an additional amount over and above the cost of securities/shares is charged by the foreign holding company from the domestic subsidiary company, by whatever name called, GST would be leviable on such additional amount charged as consideration for the supply of services of facilitating/ arranging the transaction in securities/ shares by the foreign holding company to the domestic subsidiary company. The GST shall be payable by the domestic subsidiary company on reverse charge basis in such a case on the said import of services.
8. Circular 214/8/2024: Clarification on the requirement of reversal of input tax credit in respect of the portion of the premium for life insurance policies which is not included in taxable value.
Whether the amount of insurance premium, which is not included in the taxable value as per Rule 32(4) of CGST Rules.
It is clarified that the amount of the premium for taxable life insurance policies, which is not included in the taxable value as determined under rule 32(4) of CGST Rules, cannot be considered as pertaining to a non-taxable or exempt supply and therefore, there is no requirement of reversal of input tax credit as per provisions of Rule 42 or rule43 of CGST Rules, read with sub-section (1) and sub-section (2) of Section 17 of CGST Act, in respect of the said amount.
9. Circular 215/9/2024: Clarification on taxability of salvage/ wreck value earmarked in the claim assessment of the damage caused to the motor vehicle.
1. Whether the insurance company is liable to pay GST on the salvage/ wreckage value earmarked in the claim assessment of the damage caused to the motor vehicle?
If the insurance claim is settled by the insurance company as per the terms of the insurance contract by deducting value of salvage/ wreckage from the claim settlement amount, the salvage/ wreckage does not become property of insurance company, and the ownership for such wreckage/ salvage remains with the insured. Accordingly, there does not appear to be any supply of salvage by insurance company and as such, there does not appear to be any liability under GST on the part of insurance company in respect of this salvage value.
2. Where the insurance contract provides for settlement of claim on full IDV, without deduction of value of salvage/ wreck, the insured will be paid for full claim amount without any deductions on account of salvage value.
The salvage becomes the property of Insurance Company after settling the claim for the full amount and the insurance company is obligated to deal with the same or dispose of the same. In such cases, the outward GST liability on disposal/sale of the salvage is to be discharged by the insurance companies.
10. Circular 216/10/2024: Clarification in respect of GST liability and input tax credit (ITC) availability in cases involving Warranty/ Extended Warranty, in furtherance to Circular No. 195/07/2023-GST dated 17.07.2023.
1. Where warranty is provided by the manufacturer/ suppliers to the customers in respect of any goods, and if any defect is detected in the said goods during the warranty period, the manufacturer may be required to replace either one or more parts or the goods as such, depending upon the extent of damage/ defect noticed in the said goods. Neither further GST is chargeable on such replacement of parts and/ or repair service during warranty period nor be treated as Exempt supply for Sec 17(2).
2. Further Goods or parts thereof if replaced through distributor, In such a case, no GST is payable on such replenishment of goods or the parts, as the case may be. Further, no reversal of ITC is required to be made by the manufacturer in respect of the goods or the parts, as the case may be, so replenished to the distributor.
3. Where agreement for extended warranty is made at the time of original supply of goods, and the supplier of extended warranty is different from the supplier of goods, the supply of extended warranty and supply of goods cannot be treated as Page 4of 5the composite supply. In such cases, supply of extended warranty will be treated as a separate supply from the original supply of goods.
4. Where supply of extended warranty is made subsequent to the original supply of goods, shall be treated as a supply of services distinct from the original supply of goods, and the supplier of the said extended warranty shall be liable to discharge GST liability applicable on such supply of services.
11. Circular 217/11/2024: Entitlement of ITC by the insurance companies on the expenses incurred for repair of motor vehicles in case of reimbursement mode of insurance claim settlement.
1. The insurance companies, which are engaged in providing general insurance services in respect of insurance of motor vehicles, insure the cost of repairs/ damages of motor vehicles incurred by the policyholders and settle the claims in two modes i.e., Cashless or Reimbursement. Whether ITC is available to insurance companies in respect of repair expenses reimbursed by the insurance company in case of reimbursement mode of claim settlement.
ITC is available to Insurance Companies in respect of motor vehicle repair expenses incurred by them in case of reimbursement mode of claim settlement.
2. Where the invoice raised by the garage also includes an amount in excess of the approved claim cost, the insurance company only reimburses the approved claim cost to the garage after considering the standard deductions viz. the compulsory deductibles to be borne by the insured, depreciation, improvements outside the coverage, value of salvage of the damaged parts of the motor vehicles, etc. The remaining amount is to be paid by the insured to the garage. What is the extent of ITC available to the insurer in such cases?
Input tax credit may be available to the insurance company on the said invoice issued to the insurance company subject to reimbursement of said amount by insurance company to the customer. only to the extent of reimbursement of the approved claim cost to the insured, and not on the full invoice value.
3. Whether ITC is available to the insurer where the invoice for the repair of the vehicle is not in name of the insurance company.
In such a case, condition of clause (a) and (aa) of section 16(2) of CGST Act is not satisfied and accordingly, input tax credit willnot be available to the insurance company in respect of such an invoice.
12. Circular 218/12/2024: Clarification regarding taxability of the transaction of providing loan by an overseas affiliate to its Indian affiliate or by a person to a related person
Whether the activity of providing loans by an overseas affiliate to its Indian affiliate or by a person to a related person, where there is no consideration in the nature of processing fee/ administrative charges/ loan granting charges etc., and the consideration is represented only by way of interest or discount, will be treated as a taxable supply of service under GST or not.
In the cases, where no consideration is charged by the person from the related person, or by an overseas affiliate from its Indian party, for extending loan or credit, other than by way of interest or discount, it cannot be said that any supply of service is being provided between the said related persons in the form of processing/ facilitating/ administering the loan, by deeming the same as supply of services. Accordingly, there is no question of levy of GST on the same by resorting to open market value for valuation of the same as per rule 28 of Central Goods and Services Tax Rules, 2017.
However if consideration is charged seprately, then it will be liable to GST as supply of services by the lender to the related person availing the loan.
13. Circular 219/13/2024: Clarification on availability of input tax credit on ducts and manholes used in network of optical fiber cables (OFCs) in terms of section 17(5) of the CGST Act, 2017.
Whether the input tax credit on the ducts and manholes used in network of optical fiber cables (OFCs) for providing telecommunication services is barred in terms of clauses (c) and (d) of sub-section (5) of section 17of the CGST Act, read with Explanation to section 17of CGST Act ?
Ducts and manholes are basic components for the optical fiber cable (OFC) network used in providing telecommunication services. The OFC network is generally laid with the use of PVC ducts/sheaths in which OFCs are housed and service/connectivity manholes, which serve as nodes of the network, and are necessary for not only laying of optical fiber cable but also their upkeep and maintenance. Therefore, input tax credit is not restricted in respect of such ducts and manhole used in network of optical fiber cables (OFCs),either under clause (c) or under clause (d) of sub-section (5) of section 17 of CGST Act.
14. Circular 220/14/2024: Clarification on place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors
1. Whether the activity of providing Custodial Services by banks or financial institutions to FPIs will be treated as services provided to ‘account holder’ under Section 13(8)(a) of the IGST Act, 2017?
As per clarification given in Education Guide under Service Tax Regime, the custodial services are not considered to be covered under the services provided by bank to account holders, but have been considered to be covered under the services which are not provided to account holder. it is clarified that the custodial services provided by banks or financial institutions to FPIs are not to be treated as services provided to ‘account holder’.
2. How the place of supply of the said services shall be determined?
The said services are not covered under Section 13(8)(a) of the IGST Act. Therefore, the place of supply of such services is not to be determined under Section 13(8)(a) of the IGST Act but has to be determined under the default provision i .e., sub-section(2) of section 13 of the IGST Act.
15. Circular 221/15/2024: Clarification on time of supply in respect of supply of services of construction of road and maintenance thereof of National Highway Projects of National Highways Authority of India (NHAI)in Hybrid Annuity Mode (HAM) model.
Under HAM model of National Highways Authority of India (NHAI), the concessionaire has to construct the new road and provide Operation & Maintenance of the same which is generally over a period of 15-17 years and the payment of the same is spread over the years. What is the time of supply for the purpose of payment of tax on the said service under the HAM model?
In HAM contract, the payment is made spread over the contract period in installments and payment for each installment is to be made after specified periods, or on completion of an event, as specified in the contract. The same appears to be covered under the ‘Continuous supply of services’ as defined under section 2(33) of the CGST Act.
The tax liability on the concessionaire under the HAM contract, including on the construction portion, would arise at the time of issuance of invoice, or receipt of payments, whichever is earlier, if the invoice is issued on or before the specified date or the date of completion of the event specified in the contract, as applicable. If invoices are not issued on or before the specified date or the date of completion of the event specified in the contract, tax liability would arise on the date of provision of the said service (i.e., the due date of payment as per the contract), or the date of receipt of the payment, whichever is earlier.
It is also clarified that as the installments/annuity payable by NHAI to the concessionaire also includes some interest component, the amount of such interest shall also be includible in the taxable value for the purpose of payment of tax on the said annuity/installment in view of the provisions of section 15(2)(d) of the CGST Act.
16. Circular No. 222/16/2024-GST:
The Circular No. 222/16/2024-GST issued by the Central Board of Indirect Taxes and Customs addresses the clarification on the time of supply for services related to spectrum usage under GST. It responds to queries from trade and field formations regarding GST payment in cases where telecom operators opt for deferred payments for spectrum allocation services as per Frequency Assignment Letters (FALs) issued by the Department of Telecommunications (DoT), Government of India. The Circular clarifies that GST liability arises either when payments are due or made, whichever is earlier, whether upfront or in installments. It categorizes such services as continuous supplies under the CGST Act, with specific guidelines on invoicing and payment schedules derived from FALs.
The clarification emphasizes that under the spectrum allocation model, where telecom operators bid for spectrum rights, the government (via DoT) acts as the service provider, and telecom operators as recipients. It aligns the time of GST liability with the dates specified in the FALs, treating them akin to invoicing dates for the purpose of determining GST payment timelines. This approach ensures uniformity in GST application across different field formations and provides clarity on compliance obligations for both taxpayers and tax authorities.
In addition, the Circular addresses concerns raised by some field offices regarding interest on delayed payments beyond 60 days from the issue of FALs. It distinguishes the FAL from a conventional invoice, clarifying that GST invoicing requirements align with the due dates specified in the FALs.
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