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TMI BlogClarifications regarding applicability of GST on certain servicesX X X X Extracts X X X X X X X X Extracts X X X X ..... vy penal charges in place of penal interest. 2.2 Regulated Entities (REs) such as banks and non-banking financial companies (NBFCs) have been instructed, vide RBI instructions dated 18.08.2023, to discontinue the use of penal interest for non-compliance with loan terms. As per the instructions, instead of penal interest, REs are to levy penal charges for non-compliance with loan terms. The intent of levying penal charges is essentially to inculcate a sense of credit discipline. These instructions are effective from 01.01.2024, and do not apply to credit cards, external commercial borrowings, trade credits and structured obligations which are covered under product specific directions. 2.3 It is being viewed by certain field formations that penal charges so levied are in the nature of payment/consideration for tolerating an act or situation. Similar issues were examined in Trade Circular No. 11/2022 dated 29.09.2022, wherein it has already been clarified that certain payments such as liquidated damages for breach of contract are not a consideration for tolerating an act or situation. They are rather amounts recovered to deter such acts; such amounts are for preventing breach of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement and Escrow Account Management' makes it clear that the PAs receive payments from customers in an escrow account, and are obligated to do the final settlement with the merchant within time periods specified by RBI. Therefore, the RBI regulated PAs, involved in the settlement process of making payments to the merchant, are covered by the second part of the definition of acquiring bank, i.e. "any other person, who makes the payment to any person who accepts such card" and hence, fall within the definition of acquiring bank, for the purpose of the exemption under Sl. No. 34 of notification No. 1136-F.T. dated 28.06.2017, as they make the payment to the merchants who accept credit cards, debit cards, charge cards or other payment card services. 3.5 Further, the RBI's Guidelines dated 17.03.2020 clearly distinguish between Payment Aggregators and Payment Gateways (PGs), keeping in view their role vis-à-vis handling funds. PAs are defined as entities who receive payments from customers, pool and transfer them on to the merchants within a specified time period. On the other hand, PGs are defined as entities that provide technology infrastructure to route and facilitate proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis. 4.4 Thus, as recommended by the 55th GST Council, the payment of GST on the supply of research and development services by Government Entities against grants received from the Government Entities is regularized for the period 01.07.2017 to 09.10.2024, on 'as is where is' basis. 5. Regularizing payment of GST on skilling services provided by Training Partners approved by the National Skill Development Corporation. 5.1 On the recommendations of the 54th meeting of the GST Council held in New Delhi on 09.09.2024, the entry at Sl. No. 69 of the Notification No. 1136-F.T. dated 28.06.2017 was amended vide Notification No. 1786-F.T. dated 22.11.2024, to synchronize it with the new regulatory framework for skill development under NCVET. 5.2 As a result of the aforesaid amendment, the earlier exemption available to the skilling services provided by Training Partners approved by National Skill Development Corporation was withdrawn. The amended exemption was restricted to the skilling services provided by Training Bodies accredited with an Awarding Body that is recognized by the NCVET. Later, it was informed by the Ministry of Skill Development and Entrepreneurship, Government of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pality under Article 243W of The Constitution of India. 6.4 However, in the instant case, MCD is receiving the services of facility management such as housekeeping, civil maintenance, furniture maintenance and horticulture agency for the upkeep of their office. These services are not supplied in relation to performing any functions entrusted to a Municipality under Article 243W of The Constitution of India. Such services are not covered under the scope of entry at Sr. No. 3A of the notification No. 1136-F.T. dated 28.06.2017. 6.5 Thus, as recommended by the 55th GST Council, it is hereby clarified that GST is applicable on the services provided by facility management agency to MCD, Delhi HQ for upkeep of its head quarter building at applicable rates as these services are not covered under the scope of entry at Sr. No. 3A of the notification No. 1136-F.T. dated 28.06.2017. 7. Whether Delhi Development Authority (DDA) is a local authority as per section 2(69) of the WBGST Act, 2017? 7.1 Representation has been received from DDA seeking clarification whether DDA is a 'local authority' as per section 2(69) of WBGST Act, 2017. 7.2 As per entry at Sr. No. 5 of notification No. 1137- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling (commercial property) by unregistered person to a registered person for taxpayers registered under composition levy may be regularized on 'as is where is' basis for the intervening period (i.e., from 10.10.2024 to 15.01.2025). 8.5 Thus, as recommended by the 55th GST Council, payment of GST on Reverse Charge (RCM) basis on renting of immovable property other than residential dwelling (commercial property) by unregistered person to registered person under composition levy is hereby regularized for the period from 10.10.2024 to 15.01.2025 on 'as is where is' basis. 9. Regularizing payment of GST on certain support services provided by an electricity transmission or distribution utility. 9.1 The GST Council, in its 54th meeting recommended to exempt supply of services by way of providing metering equipment on rent, testing for meters/ transformers/ capacitors etc., releasing electricity connection, shifting of meters/service lines, issuing duplicate bills etc., which are incidental or ancillary to the supply of transmission and distribution of electricity provided by electricity transmission and distribution utilities to their consumers. Thereafter, entry at Sr. No. 25A was i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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