GST Rates & Exemptions: List Of 16 Services

The Board has received representations seeking clarification on the various issues, including the GST rate of ice-cream, GST on storage or warehousing of cotton in baled or ginned form, GST on sanitation and conservancy services supplied to the army, etc.

The issues have been examined by the GST Council at its 47th meeting, held on June 28th and 29th, 2022. The issue-wise recommendations are as follows:

Ice cream parlours are required to pay 18% GST on the supply of ice cream from 6.10.2021

On the recommendation of the GST Council in its 45th meeting, it was clarified that ice cream parlours sell already manufactured ice-cream and they do not have the characteristics of a restaurant. Hence, ice cream sold by a parlour or any similar outlet attracts a standard rate of 18% GST with ITC.

The representations were received requesting that 18% GST may be levied on the supply of ice-cream by ice-cream parlours with effect from 06.10.2021.

It has been represented that ice cream parlours which paid 5% GST without ITC in view of prevailing doubt before the issuance of the Circular dated 6.10.2021 did not avail ITC and paid 5% in cash. The ice-cream parlours have thus foregone significant ITC benefits.

The council recommended that past cases of payment of 5% GST on the supply of ice-cream by ice-cream parlours without ITC be treated as fully GST paid to avoid unnecessary litigation. Because the decision was only to standardise past practice, no refund of GST will be allowed if it was already paid at 18%.With effect from 6.10.2021, the ice-cream parlours are required to pay GST on the supply of ice-cream at the rate of 18% with ITC.

No GST on services supplied by "educational institutions" to students

The representations have been received regarding the applicability of GST on application fees charged for entrance or the fees charged for the issuance of eligibility certificates for admission or for the issuance of migration certificates by educational institutions.

The council clarified that the educational services supplied by educational institutions to their students are exempt from GST. The consideration charged by the educational institutes by way of an entrance fee for the conduct of entrance examinations is also exempt. The exemption is wide enough to cover the amount or fee charged for admission or entrance, or the amount charged for application fee for entrance, or the fee charged to prospective students for the issuance of an eligibility certificate to them in the process of their entrance or admission to the educational institution. Services supplied by an educational institution by way of the issuance of a migration certificate to the leaving or ex-students are also covered by the exemption.

The GST exemption is available on the amount or fee charged by prospective students for admission, or for the issuance of eligibility certificates to them in the process of their admission and the fee charged for the issuance of migration certificates by educational institutions to the leaving or ex-students.

GST Exemption on service by way of storage or warehousing of cotton withdrawn from July 18, 2022

The representations were received regarding the applicability of the GST exemption on the service of storage or warehousing of cotton in baled or ginned form.

Prior to 18.07.2022, entry 24 B of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 exempted services by way of storage and warehousing of, inter alia, raw vegetable fibres such as cotton, flax, jute etc. The Cotton Fiber glossary by barnhardtcotton.net defines "cotton staple, virgin cotton, or raw cotton" as cotton fibres that are removed from the cotton seed by the gin.

The council clarified that service by way of storage or warehousing of cotton in ginned or baled form was covered under entry 24B of notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 in the category of raw vegetable fibres such as cotton. It may, however, be noted that the exemption has been withdrawn with effect from 18.07.2022.

No GST on the movement of empty containers from Nepal and Bhutan, after delivery of goods

The representations were received regarding the applicability of GST on transportation of empty containers returning from Nepal and Bhutan after delivery of transit cargo to India.

The GST on the supply of services associated with transit cargo to Nepal and Bhutan was exempted w.e.f. 29.09.2017 based on recommendations of the 20th GST Council Meeting.

It was clarified that exemption under Sl. No. 9B of Notification 12/2017-Central Tax (Rate) covers services associated with transit cargo both to and from Nepal and Bhutan.

The movement of empty containers from Nepal and Bhutan, after delivery of goods there, is a service associated with the transit of cargo to Nepal and Bhutan and is therefore covered by the exemption.

The cargo has to be transshipped/transited to Nepal and Bhutan as per Regulations under the Customs Act read with the Treaties for Trade and Transit with Nepal and Bhutan. Under the regulations and procedures, the container number, which is a unique alphanumeric identifier for the container, is declared. The customs broker/shipping line/carrier is responsible for making available a track and trace facility for locating goods brought for transhipment.

With respect to transit or transhipment of cargo to Nepal, specific regulations have been notified, namely, Transhipment of Cargo to Nepal under Electronic Cargo Tracking System Regulations, 2019. As per the regulations also, the authorised carrier has to execute a general bond for an amount as directed by the proper officer. The authorised carrier also has to procure ECTS (Electronic Cargo Tracking System) from a bi-laterally appointed managed service provider. In order to discharge the bond, the proper officer of customs has to extract trip reports from the ECTS web application as proof of completion of transhipment. The reconciliation of transhipment of consignments shall be carried out on the basis of a trip report by the proper officer at the ports of Kolkata, Haldia, or Visakhapatnam, as the case may be, and then only the general bond submitted by the authorised carrier will be re-credited or discharged.

No GST Exemption on sanitation and conservancy services supplied to Army and other Central and State Government departments

The exemption under entry 3 and 3A of notification 12/2017-Central Tax (Rate) dated 28.06.2017 has been given on pure services and composite supplies procured by the Central Government, State Government, Union Territories or local authorities for performing functions listed in the 11th and 12th schedule of the constitution. It is clarified that if services are procured by the Indian Army or any other department which does not perform any functions listed in the 11th and 12th Schedule, in the manner a local authority does for the general public, it is not eligible for exemption under Sl. No. 3 and 3A of Notification 12/2017-Central Tax (Rate).

5% GST on selling of space for advertisement in souvenirs

The term "book" has been defined in the Press and Registration of Books Act, 1867 in an inclusive manner with a wide ambit which would cover souvenir books also. The GST Council clarified that the sale of space for advertisement in souvenir books is covered under serial number (i) of entry 21 of Notification No. 11/2017-Central Tax (Rate) and attracts 5% GST.

12% GST on the rental of trucks and other freight vehicles with a driver for transportation of minerals from mining pit head to railway siding, beneficiation plant etc.

The representations have been received to clarify the taxability of transport of minerals within a mining area, say from mining pit head to railway siding, beneficiation plant, etc., by vehicles deployed with a driver for a specific duration of time.

The council clarified that renting of trucks and other freight vehicles with a driver for a period of time is a service falling under Heading 9966 and not a service of transportation of goods by road. It is not eligible for exemption. On rental services of goods carriages where the cost of fuel is included in the consideration charged by the recipient of service, the GST rate has been reduced from 18% to 12% with effect from 18.07.2022. Prior to 18.07.2022, it attracted GST at the rate of 18%.

GST exemption on location charges or PLC paid upfront in addition to the lease premium for long term lease of land constitutes part of the upfront amount charged for long term lease of land

As per the recommendation of the GST Council, it was clarified that location charges or preferential location charges (PLC) paid upfront in addition to the lease premium for long-term lease of land constitute part of the upfront amount charged for long-term lease of land and are eligible for the same tax treatment. Thus, they are eligible for exemption under Sl. No. 41 of notification no. 12/2017-Central Tax (Rate) dated 28.06.2017.

Services provided by the guest anchors in lieu of honorarium attract GST

The council clarified that the supply of all goods and services is taxable unless exempt or declared as' neither a supply of goods nor a supply of services'. Services provided by the guest anchors in lieu of an honorarium attract GST liability. However, guest anchors whose aggregate turnover in a fiscal year does not exceed Rs 20 lakhs (Rs 10 lakhs in special category states) are exempt from registration and payment of GST.

No GST on additional toll fees collected in the form of higher toll charges from vehicles not having fastag

Entry 23 of notification No.12/2017-Central Tax (Rate) dated June 28, 2017 exempts service by way of access to a road or a bridge on payment of toll charges.

The Ministry of Road Transport & Highways (MORTH) has directed to collect additional amounts from the users of the road to the extent of two times the fees applicable to that category of vehicle which does not have a valid functional Fastag.

The additional amount collected from the users of the road for not having a functional fastag is in the nature of toll charges and should be treated as additional toll charges.

On a similar issue of collecting overloading charges in the form of a higher toll, it has already been clarified that overloading charges at toll plazas would get the same treatment as given to toll charges.

Therefore, it was clarified that additional fees collected in the form of higher toll charges from vehicles not having Fastag is essentially payment of toll for allowing access to roads or bridges to such vehicles and may be given the same treatment as given to toll charges.

No GST on an ailment of infertility is treated using an ART procedure such as IVF

The healthcare services provided by a clinical establishment, an authorised medical practitioner or para-medics are exempted. Infertility is a condition that is treated with an ART procedure such as IVF. It was clarified that IVF services are included in the definition of health care services for the purposes of the above exemption notification.

Services provided for the development of land, like levelling, laying of drainage lines, attract GST

As per Sl No. (5) of Schedule III of the Central Goods and Services Tax Act, 2017, "sale of land" is neither a supply of goods nor a supply of services. Therefore, the sale of land does not attract GST. Land may be sold either as it is or after some development, such as levelling, laying down of drainage lines, water lines, electricity lines, etc. It was clarified that the sale of developed land is also a sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and, accordingly, does not attract GST. However, it may be noted that any service provided for the development of land, like levelling, laying of drainage lines (as may be received by developers), shall attract GST at the applicable rate for such services.

GST under RCM is payable on the hire of a motor vehicle by a body corporate for a period of time

It was clarified that where the body corporate hires the motor vehicle (for transport of employees etc.) for a period of time during which the motor vehicle shall be at the disposal of the body corporate, the service would fall under Heading 9966. The corporate body is required to pay GST under RCM.As can be seen, reverse charge would apply to the act of a body corporate renting vehicles.It is for the body corporate to use in the manner it likes, subject to agreement with the person providing the vehicle on rent.

However, if the body corporate uses a passenger transport service for specific journeys or voyages, the service falls under Heading 9964 and the body corporate is not required to pay GST under RCM.

GST exemption on passenger transportation services by non-air-conditioned contract carriages

The council clarified that the exemption would apply to passenger transportation services by non-air-conditioned contract carriages falling under Heading 9964, where, according to explanatory notes, transportation takes place over a predetermined route on a predetermined schedule. The exemption shall not apply where contract carriage is hired for a period of time during which the contract carriage is at the service recipient's disposal and the recipient is thus free to decide the manner of usage subject to the terms of the agreement entered into with the service provider.

18% GST on the construction, installation and commissioning of a dairy plant

A contract for the construction, installation, and commissioning of a dairy plant constitutes a supply of works contract. There is no doubt that the dairy plant that comes into existence as a result of such contracts is an immovable property. The work contract services were eligible for a concessional rate of 12% GST prior to 18.07.2022. With effect from 18.07.2022, the work contract would attract GST at the rate of 18%.

GST exemption on tickets purchased for transportation from one point to another.

The exemption would apply to tickets purchased for transportation from one point to another, irrespective of whether the ferry is owned or operated by a private sector enterprise or by a PSU/government. The expression "public transport" used in the exemption notification only means that the transport should be open to the public. It can be privately or publicly owned. The only exclusion is on transportation, which is predominantly for tourism, such as services which may combine transportation, sightseeing, food and beverages, music, accommodation such as in shikara, cruises etc.

Click Here To Read/Download Circular