Government has issued total Nine Notifications on 19 October, 2023 which have been made effective from 20th October, 2023.
In this article, we will discuss each Notifications for the changes it has made and Reasons for such change.
Change-1
At Present
GST Rate on Transport of Passengers by motor vehicles where cost of fuel is included in consideration is 5% subject to condition:
a. He will not avail ITC on Inputs Goods and Services except for availed from Similar Lines of business.
Changes Made & Its Impact
Here following loop poles emerged that like Ram who is providing transport service to end customer for Rs. 1000 at GST rate of 5% (GST output Rs. 50) may be availing ITC of 12% if he use transport service from other transporter without fuel (Rs. 800*12%).
By N.No. 12/2023 same has been plugged by adding additional condition that Ram will not eligible for ITC more than GST Rate of 5% of value of input service from other transporter. (i.e. 800*5%).
Change-2
At Present
GST Rate on “Services Provided by a Race Club by way of Totalisator or License to bookmaker in such club” is 28%.
Changes Made & Its Impact
Now, instead of Totalisator or License to , licensing a has been inserted i.e.
“Services Provided by a Race Club by way of Licensing a bookmaker in such club”
Changes have been made because, now Horse Racing has been considered as Specified Actionable claim which is Good. Accordingly, GST rate of 28% is prescribed in N.No. 11/2023 amending N.No. 1/2017.
(For more details about Specified Actionable Claims please read at https://www.fabgyan.com/post/gst-on-online-games-everything-to-know-about)
Change-3
At Present
Earlier, as per Scheme of Classification for Services Gambling & betting services and Lottery Services were considered as Services.
Changes Made & Its Impact
Now, both these activities have been considered as Specified Actionable claim which is Good.
Accordingly, both have been deleted from Scheme of Classification of Service.
Change-1
At Present
New Exemption has been inserted.
Changes Made & Its Impact
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.
In this regards, we suggest you to read Latest Hon’ble Supreme Court Judgement defining meaning of Govt. Authority. The same may be read at Government Authority.
Change-2
At Present
Services provided by CG, SG, UT & Local Authority is exempt excluding by
Department of Post, or
Related to Transport of Goods or Passengers or
Services related to aircraft or vessel
Services provided to Business Entities
Changes Made & Its Impact
Due to this exemption notification, Services provided by Indian Railways to individuals other than passenger services were exempt.
Now to make it taxable, Indian Railways has been added in Exclusion List in the Exemption List.
At Present
Services excluding transport and passenger services by Indian Railways to the Business Entity are covered under RCM.
Changes Made & Its Impact
Now, after changes, it will come under Forward Charge.
Reason for change
Before changes as services excluding related to Transport and Passenger services by Indian Railways were under RCM. Therefore, these supplies were to be considered as Exempt Supply as per Section-17 in the Hand of Indian Railways. Accordingly, Indian Railways was not eligible for ITC.
Now, after it falls in forward charge, Indian Railways will be able to utilise ITC resultant in reduction of cost to Indian Railways.
At Present
As per Notification 15/2017: Refund of unutilised ITC u/s 54(3) under Inverted Duty Structure is not allowed in case of Supply of Service under clause 5(b) of Schedule-II i.e.
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, 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
Changes Made & Its Impact
Now, through this amendment, following words have been added
where the amount charged from the recipient of service includes the value of land or undivided share of land.
So where service is purely for construction without Land, it will be eligible for Refund.
At Present
Services by anyone by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motor cycle, omnibus or any other motor vehicle through E-Com Operator is under RCM.
Changes Made & Its Impact
Now, Omnibus service by a “Company” through E-Commerce has been made taxable under Forward charge.
It will allow them to use ITC .
Rate on Goods have been notified Rate on Goods
Molasses: 5% (Earlier 28%)
Food preparation of millet flour, in powder form, containing at least 70% millets by weight, pre-packaged and labelled: 5%
Spirits for industrial use: 18%
Food preparation of millet flour, in powder form, containing at least 70% millets by weight, other than pre-packaged and Labelled: NIL
At Present
As per Notification 4/2017: Refund of unutilised ITC u/s 54(3) under Inverted Duty Structure is not allowed in case of specified goods in the Notification.
Changes Made & Its Impact
Now, In this notification following entry has been added:
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”;
At Present
Supply of Used vehicles, seized and confiscated goods, old and used goods, waste and scrap by Central Government, State Government, Union territory or a local authority to Registered Person is under RCM.
Changes Made & Its Impact
Now, In case of Indian Railways, it has been brought under Forward Charge.
Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.
Rate on Goods have been notified
Rate on Goods have been notified
At Present
At Present
At Present