RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Chairman of PM’s Economic Advisory Committee has expressed that in the six years since its launch, GST revenue collections have gone from strength to strength. This is true for both collection on domestic supplies as well as when integrated GST (IGST) paid on imports is included with the trend particularly sharp from 2020-21 onwards.

CBIC has issued various rate notifications (Notification Nos. 12 to 20, all dated 19.10.2023) to implement decisions of 52nd meeting of GST Council held on 7th October, 2023. These inter alia, include exemption to Governmental Authority for supply related to water supply, public health etc; railway services to be covered under forward charge, refund of accumulated credit on construction related services, 5% GST on Molasses and branded millet flour etc. Corresponding Notifications have also been issued under IGST / UTGST.

In fight against fake input tax credit, DGGI has detected more than 6,000 fake ITC cases involving more than Rs. 57,000 crore GST evasion with the arrest of 500 persons between April 2020 to September 2023. In FY23-24, DGGI has detected  Rs. 1.36 lakh crore overall GST evasion involving voluntary payment of Rs. 14,108 crore.

Department has started issuing notices under OIDAR services and online gaming. Government is expecting GST revenue of around Rs. 2000 crore from this sector in 2023-24. 

Change in condition for passenger transport services

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 11/2017-CT (Rate) dated 28.06.2017 to change rate of tax or conditions in respect of passenger transport services as follows:         

• Passenger transport services (S.No.8)
• Rate of tax would be 2.5% for transport of passengers by motor cab where cost of fuel is included in the consideration charged from the service recipient subject to condition that the supplier of input service in the same line of business charges central tax at a rate higher than 2.5%, credit of input tax charged on the input service in the same line of business in excess of the tax paid or payable at the rate of 2.5%, shall not be taken.

• Rental services of transport vehicle (S.No.10)

• Rate of tax would be 2.5% for renting of motor cab where cost of full is included in consideration charged from service recipient subject to condition that where the supplier of input service in the same line of business charges central tax at a rate higher than 2.5%, credit of input tax charged on the input service in the same line of business in excess of the tax paid or payable at the rate of 2.5%, shall not be taken.

• Recreational, cultural & sporting services (S.No. 34)

• Services now covered are of race club by way of licensing a book maker
• Services by way of gambling omitted
• In scheme of classification of services, S.No. 696 relating to gambling and betting services and S.No. 698 relating to lottery services have been omitted.

5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 12/2023-Central Tax (Rate) dated 19.10.2023)

Exemption to services provided by Government Authority 

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 12/2017-CT (Rate) dated 28.06.2017 to exempt specified services from levy of GST thereon.
5. Services provided to a Governmental Authority by way of –

(a) Water supply;

(b) Public health;

(c) Sanitation conservancy;

(d) Solid waste management; and

(e) Slum improvement and upgradation.

shall be exempt from levy of tax.

5. Government Authority means an authority or a board or any other body—

• Set up by an Act of Parliament or a State Legislature; or
• Established by any Government

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

5. Exemption to services under S. No. 6, 7, 8 and 9, i.e. services provided by the Central Government, State Government, Union Territory or Local Authority shall exclude Ministry of Railways (Indian Railways).

5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 13/2023-Central Tax (Rate) dated 19.10.2023)

No RCM for Railways  

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 13/2017-CT (Rate) dated 28.06.2017 to provide that supply of services by Indian Railways shall be taxable under forward charge mechanism.

5. Supply of services by Central Government, State Government, Union Territory or Local Authority  to a business entity will exclude services by Ministry of Railways (Indian Railways) [Entry No. 5]
5. Services supplied by Central Government by way of renting of immovable property to a registered person will exclude Ministry of Railways (Indian Railways) [Entry No. 5A]
5. Services supplied by the Indian Railways to be taxed under Forward Charge Mechanism so as to enable them to avail the input tax credit (ITC). This would result in utilisation of ITC by railways leading to cost reduction.
5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 14/2023-Central Tax (Rate) dated 19.10.2023)

Conditional refund of input tax credit to construction activities   

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 15/2017-CT (Rate) dated 28.06.2017 to allow refund of accumulated input tax credit on specified construction activities.

5. Presently, no refund of unutilized input tax credit is allowed under section 54(3) of CGST Act, 2017 in case of supply of services in relation to construction of complex etc (as per close 5(b) of Schedule II of CGST Act, 2017).
5. Now, no refund of unutilized input tax credit shall be allowed in relation to  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.
5. Refund of accumulated ITC shall be allowed on construction of civil structures, like bridges, roads, etc., which are not intended for sale to a buyer. Earlier, the refund was restricted.
5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 15/2023-Central Tax (Rate) dated 19.10.2023)

Discharge of tax by bus operators providing services through ECO’s    

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 17/2017-CT (Rate) dated 28.06.2017 to provide that bus operator companies providing services through e-commerce operators (ECO’s) shall be liable to pay tax under forward charge mechanism.
5. Presently, liability to pay GST on bus transportation services supplied through Electronic Commerce Operators (ECOs) is placed on the ECO under section 9(5) of CGST Act, 2017.
5. The following entry has been added –

(ia) services by way of transportation of passengers by an omnibus except where the person supplying such service through electronic commerce operator is a company.

5. Now, to arrive at a balance between the need of small operators for ease of doing business and the need of large organized players to take ITC, bus operators organized as companies have been excluded from the purview of section 9(5) of CGST Act, 2017. This would enable them to pay GST on their supplies using their ITC.
5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 16/2023-Central Tax (Rate) dated 19.10.2023)

Changes in GST rates on certain goods     

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 1/2017-CT (Rate) dated 28.06.2017 to change GST rates on certain goods.

5. The change in CGST rate shall be as follows:

Entry No.	Particulars of Goods	Old Rate	New Rate
92A	Molasses	28%	2.5%
96A	Food preparation of millet flour, in powder form, containing at least 70% millets by weight, pre-packaged and labelled”	-	2.5%
25A	Spirits for industrial use	-	9%

 

5. 5% GST rate shall apply on millet flour in powder form when sold in pre-packaged and labelled form which would lead to a significant reduction in tax from the existing GST rate of 18% on millet-based food preparations.
5. This shall come into force w.e.f. 20.10.2023.

 

(Source: Notification No. 17/2023-Central Tax (Rate) dated 19.10.2023)

 GST exemption to millet based food preparation

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 2/2017-CT (Rate) dated 28.07.2017 to provide exemption from levy of tax to millet based food preparation.

5. Following entry has been added

S.No.	HSN Code	Particulars of Goods
(1)	(2)	(3)
“94A.	1901	Food preparation of millet flour, in powder form, containing at least 70% millets by weight, other than pre-packaged and labelled”.

 

5. This shall come into force w.e.f. 20.10.2023.

 

(Source: Notification No. 18/2023-Central Tax (Rate) dated 19.10.2023)

Supply of goods – no RCM for Railways      

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 4/2017-CT (Rate) dated 28.06.2017 to exclude railways from reverse charge mechanism in relation to supply of goods.
5. In case of supply of goods (used vehicle, seized and confiscated goods, old and used goods, waste and scrap) to registered person by Central Government etc, Ministry of Railways (Indian Railways) shall be excluded.
5. Till now, such supplies were liable to be taxed under reverse charge basis in case of central government, state governments, union territory or local authority.
5. Now Ministry of Railways (Indian Railways) is excluded so that tax shall be payable under forward charge basis
5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 19/2023-Central Tax (Rate) dated 19.10.2023)

GST rate on Imitation Zari

5. Based on recommendation of 52^nd GST Council meeting held on 07.10.2023, CBIC has amended Notification No. 5/2017-CT (Rate) dated 28.06.2017 to amend provision related to refund of Tax on inverted duty structure

5. No refund to be allowed on polyester film (metallised)/ plastic film on account of inversion i.e. under inverted duty structure.
5. Following entry has been inserted :

S.No.	HSN Code	Particulars of Goods
(1)	(2)	(3)
“6AA.	5605	Imitation zari thread or yarn made out of metallised polyester film /plastic film; Explanation: This entry shall apply for refund of input tax credit only on polyester film /plastic film”;

5. It may be noted that the GST rate on zari thread or yarn, known by various trade names, has been reduced from 12% to 5% by inserting a new serial number under HSN 56050020.
5. This shall come into force w.e.f. 20.10.2023.

(Source: Notification No. 20/2023-Central Tax (Rate) dated 19.10.2023)

 Advisory on online money gaming / OIDAR services

• GSTN has issued an advisory on supplying of Online Money Gaming services or OIDAR or Both– Form GST REG-10 and Form GSTR-5A.
• Every person located outside taxable territory making supplies of online money gaming to a person in India is now mandated to take registration/amend his existing registration in accordance with the proposed Row (iia) in FORM GST REG-10 and also required to furnish information regarding the supplies in the proposed Tables in FORM GSTR-5A.
• It has been advised that while GSTN is in the process of developing the functionality of such new registrations or required amendment in existing registration, as the case may be, till the functionality is made available, following should be followed –

• For registration (Form GST REG-10)

1. Any person engaged in the supply of Online Money Gaming, who is required to be registered in accordance with the recent amendments, can file their registration application in the existing Form GST REG-10 itself.
2. Such person will also be required to upload a pdf copy of the information furnished in Row 2(iia) of the amended Form GST REG-10 in the ‘Documents Upload’ section available in the Part -A of Form GST REG-10 (in the prescribed format).

• For returns (Form GSTR-5A)

1. Person engaged in the supply of Online Money Gaming are required to furnish the details of such supplies in Table 5D and 5E of Form GSTR-5A.
2. Till such tables are developed and added in Form GSTR-5A on the portal, persons engaged in making supplies of Online Money Gaming are hereby advised to furnish the details of such supplies in the existing Tables 5 and 5A of Form GSTR-5A itself.

(Source: GSTN Advisory dated 17.10.2023)