📌 Circular-No-207-01-2024.pdf:
This circular from the Indian
Ministry of Finance, Department of Revenue, addresses reducing government
litigation by establishing monetary limits for appeals filed by tax
authorities. Referencing the National
Litigation Policy, which aims to optimize judicial resources and expedite case
resolution, the circular explains that appeals should not be filed below a
specified monetary limit and discourages appeals against settled precedents. The circular cites Section 120 of the CGST
Act, 2017, which empowers the Central Board of Indirect Taxes & Customs
(CBIC) to set these monetary limits for appeals. It further clarifies that not filing an
appeal in one case doesn't prevent filing in another similar case and doesn't
imply acceptance of the disputed issue.
The remainder of the multi-page circular likely details the specific
monetary limits.
The Central Board of Indirect Taxes and
Customs (CBIC) has set monetary limits for appeals by Central Tax officers to
the GSTAT, High Court, and Supreme Court under the CGST Act, based on
recommendations from the GST Council.
These limits are: ₹2,000,000 for GSTAT, ₹10,000,000 for High Court, and
₹20,000,000 for Supreme Court. The
limits are determined by the aggregate disputed amount of tax, interest,
penalty, or late fee, as applicable.
Specific rules apply for calculating the limit in cases involving
combinations of these charges, erroneous refunds, and composite orders. However, these monetary limits do *not* apply
in certain unspecified circumstances, where appeal decisions will be made on a
different basis.
This document outlines guidelines for
appealing legal decisions related to Goods and Services Tax (GST) in
India. Appeals should be based on merit,
not solely on the disputed amount. While monetary limits are set, they can be
overridden in specific situations, including:
* **Legal conflicts:** Where rules
or regulations clash with the overarching GST laws.
* **Government overreach:** When
government orders contradict GST laws.
* **Key interpretational issues:**
Disputes about valuation, classification, refunds, place of supply, or other
recurring issues requiring legal clarification.
* **Criticism of government:**
Cases involving negative remarks or costs imposed on the government.
* **Matters of justice or
revenue:** Any other situation deemed
important enough by the Board.
This document instructs departmental
representatives/counsels to inform GST Appellate Tribunal (GSTAT) or Courts
that if an appeal isn't filed, it's solely due to the monetary limit of the tax
dispute, not because the department agrees with the decision. They should
specifically reference section 120(4) of the CGST Act, 2017 to prevent such
unappealed decisions from being treated as precedents. Any implementation difficulties should be
reported to the Board.
This circular from the Indian
Ministry of Finance clarifies issues related to a special GST procedure for
manufacturers of specific commodities.
Notification No. 04/2024-Central Tax (dated 05.01.2024) outlines this procedure,
replacing a previous one. The
clarifications address concerns raised by trade associations, particularly
regarding information required about packing machines. Specifically, the circular clarifies that the
make and model number of machinery are optional in FORM GST SRM-I. If unavailable,
the purchase year can be used as the "make." However, a machine number *is* mandatory; if
one doesn't exist, the manufacturer must assign one. The circular also addresses how to handle
situations where the electricity consumption rating of a packing machine is
unavailable.
This document clarifies several aspects of the
special procedure (Notification No. 04/2024-CT dated 05.01.2024) related to
FORM GST SRM.
This document clarifies two points regarding
special procedures (Notification No. 04/2024-CT) for specified goods:
This circular from the Indian
Ministry of Finance clarifies the place of supply for goods sold to
unregistered persons under the Integrated Goods and Services Tax (IGST)
Act. An amendment effective October 1,
2023, added clause (ca) to Section 10(1), stating the place of supply is the
unregistered person's address recorded on the invoice. If the address isn't on
the invoice, it's the supplier's location.
Just stating the person's state on the invoice is sufficient for address
purposes. This clarification addresses industry questions about situations
where the billing and delivery addresses differ, particularly for e-commerce
transactions. The circular aims to ensure consistent application of this
provision.
This document clarifies the place of supply
for goods sold via e-commerce to unregistered persons when the billing and
delivery addresses differ. Specifically,
it addresses the scenario where an unregistered person (Mr. A) in State X
orders a mobile phone on an e-commerce platform to be delivered in State
Y. The clarification states that the
place of supply is determined by the delivery address (State Y) mentioned on
the invoice, not the billing address (State X).
Suppliers are advised to record the delivery address as the recipient's
address on the invoice in such cases. Finally, the document requests the
issuance of trade notices to publicize this clarification.
This circular from the Indian
Ministry of Finance clarifies the valuation of imported services provided by a
related person when the recipient is eligible for a full input tax credit. Businesses had raised concerns about tax
demands based on a broad interpretation of a provision (Schedule I, S.No. 4 of
the CGST Act) that treats the import of services from a related party as a
supply even without consideration. The
circular clarifies that when a foreign related party provides services to an
Indian entity eligible for full ITC, the same treatment outlined in Circular
No. 199/11/2023 for domestic related parties should apply. This aims to ensure
consistent implementation of the law and addresses concerns about undue tax
demands where no consideration is involved.
The circular references Rule 28 of the CGST Rules, which deals with
valuation in such transactions.
The valuation of goods and services between
related or distinct persons, where the recipient is eligible for full input tax
credit (ITC), is deemed to be the open market value as per the second proviso
to Rule 28(1) of the CGST Rules. This
applies even if the supplier chooses to value the goods at 90% of the
recipient's resale price (Rules 30/31) when the goods are for further
supply. Circular No. 199/11/2023-GST
clarified this for inter-state office transactions, stating that the invoice
value declared by the Head Office (HO) to a Branch Office (BO) is the open
market value if the BO has full ITC.
Even with no invoice, the value is deemed nil and considered the open
market value. This clarification also applies to imported services from related
parties, where the Indian registered person pays tax under reverse charge and
issues a self-invoice.
This document clarifies the valuation of
services provided by a foreign affiliate to a related domestic entity under
GST. If the domestic entity can claim a
full input tax credit, the invoice value declared by the domestic entity is
considered the open market value. Even
if the domestic entity doesn't issue an invoice for these services, the value
is deemed to be nil, which is also accepted as the open market value. The circular requests the issuance of trade
notices to publicize this clarification and asks for feedback on implementation
challenges.
This circular from the Indian
Ministry of Finance clarifies the time limit for claiming Input Tax Credit
(ITC) under the reverse charge mechanism (RCM) for supplies received from
unregistered persons. Businesses have
raised concerns about situations where RCM tax liability becomes apparent only
later, perhaps due to departmental clarifications, court judgments, or
audits. Some tax authorities argue that
the ITC claim deadline is based on the year the supply was *received*, while
businesses argue it should be based on the year the *invoice* was issued (since
the recipient issues the invoice in these RCM cases). The circular aims to clarify this
discrepancy.
A clarification was issued regarding Input Tax
Credit (ITC) claims under the CGST Act when supplies are received from
unregistered suppliers by registered recipients (Reverse Charge Mechanism -
RCM). Registered recipients must issue
their own invoices per section 31(3)(f) and pay the tax. Section 16(4), amended by the Finance Act,
2022, sets the ITC claim deadline as November 30th following the financial year
of the invoice/debit note, or the annual return filing date, whichever is
earlier. The clarification emphasizes
that the deadline is linked to the financial year of the invoice/debit note,
regardless of when the RCM tax is paid.
Under the CGST Act, recipients of goods or
services from unregistered suppliers under the reverse charge mechanism (RCM)
must issue their own invoices and pay the tax.
Because Input Tax Credit (ITC) can only be claimed with a valid invoice,
the relevant financial year for claiming ITC in these RCM cases is the
financial year in which the *recipient* issues the invoice, not the year of
supply. Late invoice issuance results in
interest penalties on the delayed tax payment and possible penalties under
Section 122 of the CGST Act.
The Central Board of Indirect Taxes
and Customs (CBIC) issued a circular clarifying how suppliers can prove they
comply with Section 15(3)(b)(ii) of the CGST Act, 2017, regarding post-supply
discounts. The issue arises when
discounts are offered via credit notes after a supply, which impacts taxable
value only if the recipient reverses the corresponding input tax credit.
Currently, there's no system for suppliers or tax officers to verify this
reversal on the common portal. The
circular clarifies that for post-supply discounts to exclude from taxable
value, they must: 1) be agreed upon at or before the supply, 2) be linked to
specific invoices, and 3) have the corresponding input tax credit reversed by
the recipient. The CBIC aims to provide a mechanism for verifying this
reversal.
Under the CGST Act, post-supply discounts are
deductible from taxable value only if specific conditions are met, including
the recipient reversing a proportionate input tax credit. Currently, there's no system to verify this
reversal. Therefore, until a verification system is implemented, suppliers must
obtain a Chartered Accountant (CA) or Cost Accountant (CMA) certificate from
the recipient confirming the reversal. This certificate should detail the
credit notes, corresponding invoices, reversed ITC amount, and the form used
for reversal (e.g., GST DRC-03). The
certificate must include a verifiable Unique Document Identification Number
(UDIN). If the total discount-related tax (CGST+SGST+IGST + cess) in a financial
year is under ₹5,00,000, a self-certificate/undertaking from the recipient with
the same details suffices. These certificates/undertakings serve as valid
evidence of compliance and should be presented to tax officers upon request
during audits or investigations, including for past transactions.
If tax authorities require proof of reversed
input tax credit related to post-sale discounts (per CGST Act section
15(3)(b)(ii)), taxpayers can provide chartered accountant/cost and management
accountant certificates or recipient-issued undertakings/certificates as
evidence. Trade notices will publicize
this circular, and any implementation difficulties should be reported.
This circular from the Indian
Ministry of Finance clarifies the GST implications of employee stock options
(ESOPs), employee stock purchase plans (ESPPs), and restricted stock units
(RSUs) granted by a company to its employees via its overseas holding company. Indian companies sometimes offer their
employees shares in the foreign holding company. When employees exercise these options, the
shares are given directly by the holding company, and the Indian subsidiary
typically reimburses the holding company. This raised questions about whether this
transaction constitutes an import of financial services subject to GST on a
reverse charge basis for the Indian subsidiary.
The circular clarifies that such transactions are *not* considered
imports of financial services and thus *not* liable for GST under reverse
charge mechanism by the Indian subsidiary.
It emphasizes that these share allotments are incentivization schemes
and not financial services.
Employee Stock Ownership Plans (ESOPs),
Employee Stock Purchase Plans (ESPPs), and Restricted Stock Units (RSUs) are
used to compensate and incentivize employees.
In the described scenario, a foreign holding company grants these
equity-based awards to employees of its domestic subsidiary. The subsidiary typically reimburses the
holding company for the cost of the shares.
Because securities (including shares) are neither goods nor services
under the GST law, and the provision of services by an employee to their
employer is not considered a supply, the transfer of ESOP/ESPP/RSU shares in
this context is not subject to GST.
This document clarifies the GST implications
for employee stock options (ESOPs), employee stock purchase plans (ESPPs), and
restricted stock units (RSUs) granted by a foreign holding company to employees
of its domestic subsidiary.
This circular's implementation should be
brought to the Board's attention. A Hindi version will be released later.
This circular from the Indian
Ministry of Finance clarifies how to handle input tax credit (ITC) related to
life insurance premiums. Specifically,
it addresses the portion of the premium *not* included in the taxable value as
per Rule 32(4) of the CGST Rules. The
circular clarifies that this portion is **not** treated as an exempt or
non-taxable supply, and therefore, ITC on this portion *does not* need to be
reversed under section 17(1) of the CGST Act read with Rules 42 & 43. The circular also includes the definition of
"life insurance business" from the Insurance Act of 1938.
Life insurance business, including policies
with investment components (unit-linked, etc.), is clarified as being within
the scope of life insurance as per the Insurance Act of 1938. For GST purposes, the value of these services
is determined by subtracting the investment portion of the premium from the
gross premium charged. If the premium covers only risk, the entire premium is
considered the value of the service.
"Exempt supply" is defined as a supply attracting nil rate of
tax, fully exempt under specific sections of the CGST/IGST Acts, or a
non-taxable supply.
This document clarifies the GST treatment of
life insurance premiums in India. A
portion of the premium is excluded from the taxable value calculation per Rule
32(4) of the CGST Rules. This excluded portion is *not* considered a
non-taxable or exempt supply, but rather is simply not included in the taxable
value calculation. Therefore, input tax
credit reversal under Rule 42 of the CGST Rules is not applicable to this
excluded portion, as it doesn't fall under the exempt supply category covered
by Section 17 of the CGST Act. The document concludes with a request for trade
notices to publicize this clarification.
Premiums for taxable life insurance policies,
excluded from taxable value calculations, are not considered related to
non-taxable or exempt supplies. Therefore, no input tax credit reversal is
required under CGST Rules 42 or 43, and CGST Act Section 17(1) and (2).
The Indian Ministry of Finance
issued a circular clarifying the GST implications on the salvage/wreck value of
damaged motor vehicles in insurance claims.
Insurance companies raised concerns regarding their GST liability on
this value. The circular clarifies that GST applies to "supply" as
defined under section 7 of the CGST Act – meaning a transaction for
consideration in the course of business.
Since the insurance company provides the service of insuring the vehicle
for a premium, and handles repairs or compensation for damages, any deduction
(like for salvage value) from the claim amount doesn't represent a separate
supply and is therefore not subject to GST.
This deduction is simply part of the overall insurance service agreement
and considered a pre-decided deductible.
When an insurance company pays a total loss
claim *less* the salvage value, the wrecked vehicle remains the property of the
insured, who can dispose of it as they choose.
The insurance company has no GST liability in this scenario.
If an insurance company pays a full claim
without deducting salvage value, the salvage becomes the insurer's
property. The insurer is then
responsible for paying GST when they sell the salvage.
This circular (216/10/2024-GST)
from the Indian Ministry of Finance clarifies GST implications for product
warranties, further elaborating on Circular 195/07/2023-GST. The earlier circular addressed GST and input
tax credit (ITC) concerning warranty replacements of parts. This new circular
clarifies that the provisions of the previous circular, specifically regarding
GST liability and ITC reversal, apply not only to the replacement of parts but
also to the replacement of the entire product under warranty. Essentially, any mention of
"part(s)" in the previous circular should now be understood as
"goods or its parts".
Distributors sometimes handle warranty
replacements for manufacturers by using their own stock. Current guidelines address
manufacturer-supplied replacements but not when distributors use their own
stock and are later replenished. This
clarification confirms that when a distributor replaces a warrantied item from
their stock and the manufacturer subsequently replenishes that stock at no cost,
the transaction is **not** subject to GST, and the manufacturer does **not**
need to reverse any input tax credit (ITC). This is consistent with existing
guidelines for similar warranty situations.
This clarification will be formally added as point (d) to Section 4 of
the circular's table.
If an extended warranty is purchased at the
same time as a product, but from a *different* supplier than the product itself
(e.g., warranty from the manufacturer, product from a retailer), the warranty
is considered a *separate* transaction from the product purchase. If an extended warranty is purchased *after*
the initial product purchase, it is always considered a *separate service* and
not tied to the original goods. In both
of these separate warranty scenarios, the warranty itself represents an
"assurance" of quality, not a pre-determined repair or replacement,
and is therefore considered a service.
Extended warranties are now clarified under
GST:
* **Purchased with the original
good from a *different* supplier:** A
separate, taxable service.
* **Purchased *after* the original
good from any supplier:** A separate, taxable service.
This circular from the Indian
Ministry of Finance clarifies the entitlement of Input Tax Credit (ITC) for
insurance companies on motor vehicle repair expenses. Insurance companies settle claims in two
ways: cashless and reimbursement. In
both, garages typically invoice the insurance company. While some field formations have disputed the
ITC eligibility in reimbursement cases, arguing the service is provided to the
insured, not the insurer, the circular aims to clarify that insurance companies
*are* entitled to ITC on repair services in *both* cashless and reimbursement
claim settlements, based on invoices issued in their name. This clarification seeks to ensure uniform
application of GST law.
Indian tax law allows general insurance
companies to claim Input Tax Credit (ITC) for motor vehicle repair expenses
even when they reimburse the insured party.
While the insured initially pays the repair shop directly, the insurance
company is ultimately liable for the approved claim cost. This makes the insurance company the
"recipient" of the repair service under the CGST Act, thus entitling
them to the ITC.
This document clarifies Input Tax Credit (ITC)
availability for insurance companies on motor vehicle repair expenses.
This circular from the Indian
Ministry of Finance clarifies the GST implications of loans between related
parties. It confirms that providing
loans, even if the only consideration is interest or discount, *is* considered
a supply under GST. However, such loans
are also *fully exempt* from GST under Notification No. 12/2017-Central Tax
(Rate). This applies to both domestic related party loans and loans from an
overseas affiliate to its Indian entity.
When companies loan money to unrelated
parties, they typically charge processing fees to cover administrative
costs. This fee is subject to GST (Goods
and Services Tax). However, loans
between related entities (e.g., within the same corporate group) often don't
involve these same processing steps or fees, as the lender already has access
to the borrower's information.
Therefore, the question arises whether GST applies to these intercompany
loans if no explicit processing fee is charged.
The document clarifies that even without a separate fee, any charges
beyond interest or discounts are considered taxable consideration for
facilitating the loan and are subject to GST.
This aligns with existing CBIC (Central Board of Indirect Taxes and
Customs) guidelines.
This document clarifies the application of GST
to loans between related parties (including overseas affiliates and Indian
entities). It explains that when a
related party provides a loan with *no charges other than interest or
discount*, there is *no GST implication*.
This is because no separate service for processing/facilitating the loan
is considered to be supplied.
However, if the lender charges *any fees in addition to interest/discount* (e.g., processing fees, administrative charges), these fees *are subject to GST*. Such fees are deemed consideration for a separate service of processing/facilitating the loan.
The circular also notes that loans between unrelated parties might involve waived processing fees due to pre-existing relationships. This does not trigger GST implications. The circular instructs the issuance of trade notices to publicize this clarification.
📌 Circular-No-219-13-2024.pdf:
The Indian Ministry of Finance
clarified that input tax credit (ITC) on ducts and manholes used in optical
fiber cable (OFC) networks is *not* blocked under section 17(5) of the CGST
Act. This clarification addresses
concerns raised by the Cellular Operators Association of India (COAI) regarding
some tax authorities denying ITC on these items, incorrectly classifying them
as immovable property. The clarification aims to ensure uniform implementation
of the law and prevent unnecessary litigation. While Section 17(5) restricts
ITC on immovable property (excluding plant and machinery), the ministry
clarifies that ducts and manholes within OFC networks do not fall under this
restriction.
Ducts and manholes used in optical fiber cable
(OFC) networks are considered "plant and machinery" under the CGST
Act and therefore eligible for input tax credit. They are not excluded as land, buildings,
civil structures, telecommunication towers, or pipelines outside factory
premises. Trade notices will publicize
this clarification.
📌 Circular-No-220-14-2024.pdf:
This circular from the Indian
Ministry of Finance clarifies the place of supply for GST purposes regarding
custodial services provided by banks to Foreign Portfolio Investors (FPIs).
Some field formations interpreted the place of supply as the location of the
service provider (the bank) according to Section 13(8)(a) of the IGST Act. However, the circular clarifies that because
custodial services involve safekeeping securities and related actions *on
behalf of the FPI*, the location of the FPI, and therefore the regulations
governing their investments, should determine the place of supply. This clarification is based on the definition
of custodial services and permitted FPI investments as defined by the
Securities and Exchange Board of India (SEBI) regulations.
This text discusses the place of supply for
GST (Goods and Services Tax) on custodial services provided by banks to Foreign
Portfolio Investors (FPIs) in India.
FPIs invest in various Indian instruments (securities, derivatives,
REITs, InvITs, etc.). Banks act as
custodians, holding these investments.
The IGST Act (and the previous Service Tax regime) specifies that the place of supply for services provided by banks to "account holders" is the location of the bank (supplier). However, "account" is defined as interest-bearing, including NRE/NRO accounts. Custodial services for FPIs don't involve interest-bearing accounts in the traditional sense. While the law provides examples of services to account holders (lending, deposits, transfers), it doesn't explicitly address custodial services. This ambiguity raises the question of whether the location of the bank or the FPI determines the GST applicability.
This document clarifies that certain financial
services, like custodial services, provided by banks are NOT considered
services to "account holders" for GST (Goods and Services Tax)
purposes in India. Therefore, these
services are not taxed based on the location of the account holder, as is
typically done for standard banking services. Instead, a default rule applies,
taxing these services based on the location of the service *receiver* if known,
or the service *provider* if the receiver's location is unknown. This
clarification aligns GST treatment with previous Service Tax rules and aims to
provide consistent taxation of these specialized financial services.
This circular from the Indian
Ministry of Finance clarifies the time of supply for GST purposes on services
related to National Highway projects under the Hybrid Annuity Model (HAM). HAM projects involve both construction and
long-term maintenance (O&M) of highways.
Because a single contract covers both aspects, with payments spread over
the entire period (typically 15-17 years), the circular clarifies that the
contract should be treated as a whole and cannot be split into separate
construction and O&M contracts for tax purposes. The remaining pages likely
detail the specific method for determining the time of supply and calculating
GST under this unified contract approach.
Under a Hybrid Annuity Model (HAM) contract
for highway construction and operation & maintenance (O&M), the tax
liability arises as follows:
Payments made by the National Highways
Authority of India (NHAI) to concessionaires are taxable. The taxable value includes any interest
component within those payments, and the tax is due on the earlier of the
service date or payment receipt date.
Trade notices will publicize this clarification.
This circular from the Indian
Ministry of Finance clarifies the GST implications for telecom operators
acquiring spectrum through installment payments. Specifically, it addresses the "time of
supply" for GST purposes when operators choose deferred payment plans
offered by the Department of Telecommunications (DoT). The circular confirms that spectrum
allocation under these installment plans is considered a "continuous
supply of services." Therefore, GST will be payable by the telecom
operator (under reverse charge mechanism) as each installment payment is made
throughout the contract period, as specified in the Frequency Assignment Letter
(FAL) issued by the DoT.
The tax liability for spectrum allocation to
telecom operators under the CGST Act is clarified. For upfront payments, GST is due when the
payment is made or due, whichever is earlier. For deferred payments, GST is due
on each instalment when the payment is made or due, whichever is earlier. The Frequency Assignment Letter is *not*
considered an invoice, so the 60-day rule for reverse charge payments doesn't
apply based on its issue date. Instead, the due dates specified in the Notice
Inviting Applications and Frequency Assignment Letter determine the GST due
date for each payment. Invoices must be
issued by the due date of each payment.
This text discusses the time of supply for
natural resources allocated by the government.
Similar to previously discussed situations, when a successful
bidder/purchaser is granted the right to use a natural resource over a period
of time, this constitutes a continuous supply of services. Payment for these services can be upfront or
in instalments. The document requests the issuance of trade notices to clarify
this and asks for feedback on implementation challenges. A Hindi version is
forthcoming.
This circular (223/17/2024-GST)
from the Indian Ministry of Finance amends circular 1/1/2017-CT regarding the
designation of Proper Officers for GST registration and composition levy. Due to the shift of GST back-office
operations from ACES-GST to GSTN BO, the responsibility for certain functions
under sections 27 and 30 of the CGST Act and rules 6, 23, and 25 of the CGST
Rules has been reassigned. These
functions, previously handled by Assistant/Deputy Commissioners or
Assistant/Deputy Directors of Central Tax, will now be handled by
Superintendents of Central Tax. The
circular includes an updated table reflecting this change and requests the
issuance of trade notices to publicize the amendment.
This circular from the Indian
Ministry of Finance clarifies procedures for recovering outstanding Goods and
Services Tax (GST) dues while the GST Appellate Tribunal is not yet
operational. It addresses two main points:
Taxpayers facing difficulty appealing
appellate authority orders and making the associated pre-deposit under CGST Act
section 112 are experiencing premature recovery proceedings. This clarification outlines the procedure for
pre-deposit payment and obtaining a stay on recovery. Taxpayers can make the pre-deposit payment
through their electronic liability register (ELL) Part II. They must also
submit an undertaking to their jurisdictional officer, declaring their intent
to file an appeal with the Appellate Tribunal when it becomes operational. Upon
fulfilling both requirements, recovery of the remaining confirmed demand will
be stayed. If the taxpayer fails to make
the pre-deposit or submit the undertaking, recovery proceedings may continue.
This document outlines procedures regarding
tax demand appeals and payments under the CGST Act. If a taxpayer doesn't file an appeal within
the specified timeframe, recovery proceedings will be initiated. Taxpayers who mistakenly paid demands using
FORM GST DRC-03 can rectify this by filing FORM GST DRC-03A. This allows the payment to be correctly allocated
and considered towards pre-deposit requirements for appeals. If an appeal is filed, the remaining demand
is stayed. However, if no appeal is
filed within the stipulated time, the remaining demand will be recovered.
This document outlines procedures for handling
inadvertent tax payments made via FORM GST DRC-03 instead of the Electronic
Liability Ledger-II. Currently, the
online portal lacks the functionality (FORM GST DRC-03A) to rectify this. Until this functionality is available,
taxpayers should inform the proper officer of the erroneous payment, and
recovery of the remaining amount will be paused. Once FORM GST DRC-03A is
available, taxpayers *must* use it to adjust the payment as a pre-deposit. Failure to do so will result in recovery of
the outstanding amount. The document
also specifies that FORM GST DRC-03A cannot be used if FORM GST DRC-05 has
already been issued. Finally, it requests
the issuance of trade notices to inform taxpayers of these procedures.
This circular from the Indian
Ministry of Finance clarifies the taxability and valuation of corporate
guarantees provided between related parties under GST. Sub-rule (2) of Rule 28 of the CGST Rules,
introduced on October 26, 2023, and subsequently amended, addresses the
valuation of such guarantees. The circular clarifies that while this sub-rule
provides a valuation method, the supply of corporate guarantees between related
parties to banking/financial institutions *was already taxable* before this
date. The circular addresses industry
concerns regarding the applicability of the rule to guarantees issued before
October 26, 2023, which are still in force.
Further clarification on specific issues is provided in the subsequent
pages of the circular.
New rules for valuing corporate guarantees
provided by a supplier to a related recipient went into effect on October 26,
2023. For guarantees issued before this
date, valuation follows the old Rule 28.
For guarantees issued on or after this date, the new Rule 28(2)
applies. The value of the guarantee is
based on the *guaranteed amount*, not the disbursed loan amount, and the
recipient can claim full Input Tax Credit (ITC) regardless of loan
disbursement. Finally, taking over
existing loans with an already issued corporate guarantee is *not* considered a
new supply and thus does not trigger a new GST charge.
Taking over an existing loan doesn't trigger
GST unless a new or renewed corporate guarantee is issued. When multiple related entities
(co-guarantors) provide a guarantee, the GST calculation depends on the
consideration paid. If the total consideration exceeds 1% of the guaranteed
amount, GST applies to the actual consideration. If it's less than 1%, each
co-guarantor pays GST on their proportional share of 1% of the guarantee. For
example, if two co-guarantors jointly guarantee Rs. 1 crore, each pays GST on
0.5% (their 50% share of 1%). However, if they guarantee 60% and 40%
respectively, they each pay GST on 1% of their respective portions (i.e., 1% of
Rs. 60 lakhs and 1% of Rs. 40 lakhs).
For intra-group guarantees issued by domestic corporates, GST is paid by
the supplier under the forward charge mechanism, not by the recipient under
reverse charge. However, if the
guarantee is from a foreign entity to a related Indian entity, the Indian
recipient pays GST under reverse charge.
Corporate guarantees provided to
banking/financial institutions on behalf of related recipients are now taxed
based on the following, as clarified by notification No. 12/2024-CT:
* **Tax Point:** GST is payable on
the *total* calculated value at the time the guarantee is *issued*. So, for a 5-year guarantee, GST on the full
5% (or higher actual consideration) is due upfront.
* **Renewals:** If a 1-year
guarantee is renewed annually, GST is due *each year* upon renewal, based on
the 1% of the guaranteed amount (or higher actual consideration) for that year.
* **Open Market Value
Proviso:** The document also addresses
the applicability of the open market value proviso (where the invoice value is
deemed open market value if the recipient has full input tax credit) in the
context of these guarantee valuations. The provided text cuts off before
completing this explanation.
This circular clarifies the valuation of
corporate guarantee services provided between related parties under GST. Effective October 26, 2023, if the recipient
can claim full input tax credit, the invoice value is considered the value of
supply. This is similar to the provision
in Rule 28 of the CGST Rules.
Furthermore, the amended Rule 28(2) clarifies that this valuation method
*does not* apply when the recipient is outside India (i.e., for exported
services). Finally, the circular
requests the issuance of trade notices to publicize these clarifications and
invites feedback on implementation difficulties.
This circular from the Indian
Ministry of Finance addresses the issue of refunding additional Integrated
Goods and Services Tax (IGST) paid by exporters due to price revisions after
export. Exporters sometimes increase
prices post-export due to factors like international indices or contractual
agreements, resulting in additional IGST payments with interest. Currently, there's no mechanism for refunding
this extra IGST. Therefore, the circular
establishes a procedure: exporters can file a refund application (FORM GST
RFD-01) electronically on the common portal.
This application will be processed by the exporter's jurisdictional GST
officer, not the customs officer, as the existing automated system doesn't
handle these post-export price revision scenarios. The CGST Rules have been amended to
facilitate this new process.
Exporters can claim refunds for additional
IGST paid due to price increases after export.
Currently, they must file using Form GST RFD-01 under the "Any
Other" category, specifying "Refund of additional IGST paid on
account of increase in price subsequent to export of goods." Required documentation includes statements 9A
& 9B, shipping bills, original invoices, contracts showing price revisions,
and any other supporting documents. GSTN
is developing a dedicated refund category for this purpose. Refunds under ₹1000 will not be
processed. The application must be filed
within two years from the relevant date as defined in the CGST Act, or, if the
relevant date was before the new rule's effective date (July 10, 2024), within
two years of that date.
This document outlines the procedure for
claiming refunds of Integrated Goods and Services Tax (IGST) on upward price
revisions for exports. Exporters must
provide documentation including original invoices, debit/supplementary
invoices, proof of additional IGST and interest payment with corresponding
GSTR-1/3B filings, proof of additional foreign exchange remittance (FIRC), and
a chartered accountant/cost accountant certificate linking the remittance to
the price revision. They must also
submit specific forms (9A and 9B of GST RFD-01). The proper officer will verify the claim
against GSTR-1/3B and remittance details, and issue a refund sanction (RFD-06)
and payment order (RFD-05) if eligible.
The circular also addresses downward price revisions, mandating
exporters to deposit the proportionate excess IGST refund with interest. Finally, it directs the issuance of trade
notices to publicize these procedures.
This circular from the Indian
Ministry of Finance, Department of Revenue (CBIC) announces a revised procedure
for the Canteen Stores Department (CSD) to electronically file GST refund
applications. Previously, CSD manually
filed for a 50% refund of CGST, IGST, and UTGST paid on inward supplies meant
for Unit Run Canteens or authorized customers.
Now, a new online functionality and revised rules (Rule 95B and Form GST
RFD-10A, via Notification No. 12/2024) enable electronic filing. This circular
supersedes the previous Circular No. 60/34/2018-GST dated 04.09.2018.
The Canteen Stores Department (CSD) can claim
a refund of 50% of the Central, Integrated, and Union Territory taxes paid on
goods supplied to their Unit Run Canteens or authorized customers. They must file a quarterly refund application
(Form GST RFD-10A) electronically, though they can combine multiple quarters
and financial years. The refund is based
on inward supply invoices, which must include the supplier's and CSD's GSTIN
and be reported in the supplier's GSTR-1 and GSTR-3B filings. The application must include an undertaking
stating the goods are for subsequent supply to Unit Run Canteens or authorized
customers, and a declaration confirming no previous refund claim for these
invoices. The CSD has two years from the
last day of the quarter the supplies were received to file the claim.
The CSD refund claim process (using FORM GST
RFD-10A) will mirror that of FORM GST RFD-01 under rule 89 of CGST Rules. Officers must validate the CSD's GSTIN and
ensure all GSTR-1 and GSTR-3B filings are up-to-date. They'll scrutinize RFD-10A, GSTR-3B, and
GSTR-2B, verifying invoice details against the supplier's GSTR-1 and GSTR-3B
filings. Refunds are capped at 50% of
paid taxes (CGST, SGST/UTGST, IGST). The
portal will validate invoices against GSTR-2B, flag previously refunded
invoices, and auto-populate Table 7 of RFD-10A with 50% of the eligible tax
amounts (editable downwards only). Officers must also ensure ITC reversal
compliance as per Circular 170/02/2022-GST.
A speaking order in FORM GST RFD-06 will be issued after scrutiny. Existing manual refund applications filed
before these amendments and portal functionality will still follow Circular
60/34/2018-GST.
Documents currently processed manually will
remain so. Trade notices will be issued
to publicize these instructions. Any implementation difficulties should be
reported to the Board. A Hindi version of the circular is forthcoming.
This circular, issued by the
Government of India's Ministry of Finance (Department of Revenue), clarifies
the applicability of GST on several services based on the recommendations of
the 53rd GST Council meeting held on June 22, 2024, in New Delhi.
- Ministry
of Railways (Indian Railways) Supplies: GST exemption is provided for services
offered by the Ministry of Railways to the general public (platform
tickets, waiting rooms, cloak rooms, battery-operated cars) and for
services between various zones/divisions. The period from 20.10.2023 to 14.07.2024
is regularized on 'as is where is' basis.
- SPVs
and Ministry of Railways Transactions: Supply of service by SPVs to Ministry of
Railways (Indian Railways) is exempted.
- RERA
Statutory Collections: It
is clarified that statutory collections made by the Real Estate Regulatory
Authority (RERA) are covered under notification No. 12/2017-CT(R).
- Incentive
Sharing in Digital Payments: Further
sharing of the incentive amount by the acquiring bank with other
stakeholders is not taxable.
- Reinsurance
of Specified Insurance Schemes: The
GST liability on the reinsurance of exempt general and life insurance
schemes is regularized on 'as is where is' basis for the period from
01.07.2017 to 24.01.2018.
- Reinsurance
of Government Paid Insurance Schemes: The GST liability on reinsurance of
government-sponsored insurance schemes is regularized on 'as is where is'
basis for the period from 01.07.2017 to 26.07.2018.
- Retrocession
Services: The
term 'reinsurance' includes 'retrocession'.
- Accommodation
Services: GST
exemption has been given for the supply of accommodation services having a
value of supply less than or equal to Rs. 20,000 per person per month and
supplied for a continuous period of 90 days (Notification effective
15.07.2024). For the period 01.07.2017 to 14.07.2024, regularization is
done on 'as is where is' basis.
In case of difficulty in
implementation of this circular, it may be brought to the notice of the Board.
This circular, issued by the
Government of India (Ministry of Finance, Department of Revenue), provides
clarifications regarding GST rates and classification of goods based on the
recommendations of the GST Council during its 53rd meeting held on June 22,
2024, in New Delhi.
- Solar
Cookers: Solar
cookers that work on dual energy (solar and grid electricity) are
classified under heading 8516 and attract a GST rate of 12%.
- Fire
Water Sprinklers: All
types of sprinklers, including fire water sprinklers, attract GST at the
rate of 12%.
- Parts
of Poultry-Keeping Machinery: Parts
of poultry-keeping machinery are classifiable under tariff item 8436 91 00
and attract GST at the rate of 12%.
- cope
of 'Pre-packaged and Labelled' Agricultural Farm Produce: Agricultural farm
produce in packages containing more than 25 kilograms or 25 liters is
excluded from the scope of 'pre-packaged and labeled' and will not attract
GST of 5%.
- Supplies
of Goods to/by Agencies Engaged by Government: Supplies made from
01.07.2017 up to 17.07.2022 to or by agencies engaged by the government
for procurement and sale of goods under approved schemes are regularized
on "as is where is" basis. Conditions apply.
The circular aims to resolve
interpretational issues and ensure consistent application of GST laws across
the country. Difficulties in implementation can be brought to the attention of
the Board. The issues for the past period are regularized on "as is where
is basis."
The Indian Ministry of Finance
clarifies the GST implications for Indian advertising agencies providing
services to foreign clients. Some field
formations have incorrectly denied export benefits to these agencies, classifying
the place of supply as within India. This circular clarifies that when an
Indian agency provides comprehensive advertising services, including media
planning, content creation, and media buying, to a foreign client who pays in
foreign exchange, the agency is *not* considered an intermediary. Therefore,
the place of supply is outside India, and the services qualify for export
benefits. This clarification aims to create uniform GST implementation and
address difficulties faced by the advertising industry.
This document clarifies whether Indian
advertising companies acting for foreign clients are considered
"intermediaries" under Indian GST law. It concludes they are *not* intermediaries.
This document clarifies the
"recipient" of advertising services provided by an Indian advertising
company to a foreign client. According
to Section 2(93) of the CGST Act, the recipient is the one liable for
payment. Therefore, the foreign client,
not their Indian representative or the target audience in India, is the
recipient. The target audience, while
located in India, is not liable for payment and thus not the recipient.
Additionally, the document addresses whether these services are
"performance-based" under Section 13(3) of the IGST Act. It concludes they are not, as they don't
involve physical goods being made available by the recipient to the supplier,
as required by the clause.
Advertising services provided by an Indian
company to a foreign client, where the foreign client doesn't need to be
physically present in India, are considered exports. This is because the place
of supply is determined by the location of the recipient (the foreign client)
as per the default provision of Section 13(2) of the IGST Act, since no other
provision applies. However, if the
Indian company acts only as an agent, connecting the foreign client with the
media owner, and the media owner directly invoices the foreign client, then the
Indian company isn't providing the service. In that case, the media owner is
the service provider, and the transaction is between the media owner and the
foreign client.
When an advertising company invoices a foreign
client for facilitation services, it acts as an "intermediary" under
GST law. Therefore, the place of supply
for these services is the location of the advertising company, not the foreign
client. The circular requests
notification of this clarification to the relevant trade and invites feedback
on implementation challenges.
This circular from the Indian
Ministry of Finance clarifies the availability of Input Tax Credit (ITC) on
demo vehicles used by authorized car dealers.
Dealers purchase these vehicles from manufacturers and use them for test
drives and demonstrations. The circular
addresses two specific questions:
Input tax credit on motor vehicles with a
seating capacity of up to 13 people is generally blocked under section 17(5)(a)
of the CGST Act, with exceptions. One
exception is for "further supply of such motor vehicles." While demo
vehicles aren't used for transporting passengers or driver training, they *are*
used to promote sales of similar vehicles. Because demo use facilitates
"further supply," input tax
credit on demo vehicles is *not* blocked.
This interpretation hinges on the use of
"such motor vehicles" (plural) in the law, suggesting that the
vehicle itself doesn't need to be resold, but rather that its use promotes the
sale of similar vehicles.
Input tax credit (ITC) on motor vehicles is
generally blocked under section 17(5) of the CGST Act. However, there are
exceptions. If a company purchases a
vehicle solely for employee transportation, ITC is not blocked. Similarly, if a dealer uses a demo vehicle
solely for test drives on behalf of the manufacturer and does not sell the
vehicles themselves, ITC is also not blocked.
However, even if capitalized, the demo vehicles are still considered to
be used for furtherance of business, making ITC unavailable to the dealer in
this specific scenario. Essentially, ITC
availability on demo vehicles depends on the dealer's role and usage. If they
are merely facilitating sales for the manufacturer, ITC is blocked.
Authorized car dealers who capitalize demo
vehicles in their accounting books can claim Input Tax Credit (ITC) on them, as
these vehicles are considered capital goods used in furtherance of business.
However, ITC claims are subject to certain conditions: 1) ITC is disallowed on the tax component if
depreciation is claimed under the Income-tax Act, 1961. 2) If the dealer sells
the capitalized demo vehicle, they must pay tax as per CGST Act section 18(6)
and rule 44(6). This clarification will
be publicized through trade notices.
This Indian government circular
clarifies the place of supply for data hosting services provided by Indian
companies to cloud computing providers outside India, for GST purposes. Some field formations have been denying
export benefits for these services, arguing the place of supply is India. The circular addresses three questions: 1)
whether the Indian data hosting provider is an "intermediary" between
the foreign cloud provider and its end users, impacting place of supply
determination; 2) whether the services relate to goods "made
available" by the recipient, affecting place of supply; and 3) whether the
services are directly related to "immovable property," also
influencing place of supply. The circular then proceeds to offer clarifications
on each of these points.
Data hosting service providers, who support
cloud computing services, are not considered intermediaries for GST (Goods and
Services Tax) purposes. While they provide crucial infrastructure and services
to cloud computing providers, they operate on a principal-to-principal basis,
meaning they provide services directly to the cloud providers, not to the
end-users. There's no direct interaction
between the data hosting provider and the end-users. Therefore, the location where GST applies
isn't determined by the intermediary rules, but needs to be assessed under
other relevant sections of the IGST Act, like Section 13(3)(a) which deals with
services related to goods made available by the recipient.
Indian tax law clarifies that data hosting
services provided in India to overseas cloud computing companies are *not*
considered services related to goods "made available" by the cloud
computing companies. Even if the cloud
computing company provides some hardware, the Indian data hosting provider
still manages the entire data center operation, including premises, software,
other hardware, power, connectivity, security, personnel, and maintenance.
Therefore, the place of supply for tax purposes is *not* determined by the
location of the cloud computing company (the service recipient) under section
13(3)(a) of the IGST Act, but rather by other provisions of the law.
Data hosting services provided by Indian
providers to overseas cloud computing companies are not considered directly
related to goods or immovable property for GST (IGST Act) purposes. Because these services encompass a
comprehensive range of activities beyond simply providing physical space and
include power, security, maintenance, and network connectivity, they don't fall
under the specific place-of-supply provisions (section 13(3) to 13(13)).
Consequently, the place of supply defaults to the recipient's location (section
13(2)). Therefore, when provided to
cloud computing companies located outside India, the place of supply for data
hosting services is considered outside India, making the transaction export of
services.
Cloud computing services provided from India
to an overseas entity are considered exports under the IGST Act, Section 2(6),
provided other conditions are met. Trade
notices will be issued to clarify this, and any implementation difficulties
should be reported.
This circular from the Indian
Ministry of Finance clarifies the procedure for regularizing IGST refunds on
exports when inputs were initially imported duty-free (using notifications
78/2017 or 79/2017) but later had IGST and compensation cess paid (with interest). Specifically, it references an explanation
added retrospectively to Rule 96(10) of the CGST Rules, stating that using
these notifications is permissible as long as IGST and compensation cess are
paid, and only basic customs duty (BCD) is exempted. The circular confirms that if these
conditions are met, the IGST refund on exports can be regularized.
If imported inputs initially benefited from
tax exemptions (Notifications 78/2017 and 79/2017) but later had IGST and
compensation cess paid (with interest) and the import documentation is
reassessed, subsequent IGST refunds on exports using those inputs are
permissible and not a violation of CGST Rule 96(10). Trade notices will be issued to clarify this.
This Indian Ministry of Finance
circular clarifies the applicability of GST on affiliation services provided by
educational institutions. Universities
providing affiliation services to colleges will be subject to 18% GST, as these
services are not exempt under existing educational institution exemptions. Similarly, affiliation services provided by
central and state educational boards or councils to schools are also subject to
GST and are not exempt. This
clarification addresses representations received and follows recommendations
from the 54th GST Council meeting.
The GST Council, in its 54th meeting,
clarified that school affiliation services provided by educational boards are
taxable. However, such services provided to government schools are exempt,
effective 10/10/2024. The Council also
regularized the GST liability for these services for all schools retroactively
from 07/01/2017 to 06/17/2021, based on a 2021 circular clarifying the 18% tax
rate for accreditation services.
Regarding flying training, the Council clarified that DGCA-approved
courses offered by approved Flying Training Organizations (FTOs) are exempt
from GST under existing rules that exempt educational services leading to
recognized qualifications.
This document clarifies several GST (Goods and
Services Tax) related issues. First, it
confirms that approved flying training courses at DGCA (Directorate General of
Civil Aviation) approved Flying Training Organizations (FTOs) are exempt from
GST. Second, it addresses the GST on
helicopter passenger transport. A 5% GST
rate applies to seat-share basis helicopter travel, effective October 10, 2024,
and past payments are regularized.
Helicopter charters remain subject to an 18% GST. Finally, the document
addresses the classification of ancillary services (loading, unloading,
packing, etc.) provided in conjunction with road goods transport. It notes that clarification is needed on
whether these services should be considered part of a composite Goods Transport
Agency (GTA) service or treated as separate supplies. Enforcement agencies are reportedly treating
them as separate supplies, leading to confusion.
Some interpreted an FAQ from the CBIC to mean
that Goods Transport Agencies (GTAs) charging separately for services like
packing and loading would be liable for 18% GST on those services as cargo
handling. However, the 54th GST Council clarified that such ancillary services
provided by GTAs *during* transport are considered part of a composite supply
of transport and thus not subject to separate GST. If these services are provided *separately*
from the transport of goods, and invoiced as such, they are *not* considered a
composite supply and would be subject to separate GST. Additionally, the same council has exempted
and regularized (retroactively to July 2017) the import of services, when
provided without consideration, between related entities of foreign airlines
operating in India.
This document clarifies and regularizes GST
payments for certain services.
The GST Council, in its 54th meeting
(September 9, 2024), regularized GST payments on transactions between film
distributors and exhibitors for theatrical rights granted on an "as is
where is" basis, retroactively covering the period from July 1, 2017, to
September 30, 2021. Any implementation
difficulties should be reported to the Board.
This circular from the Indian
Ministry of Finance clarifies GST rates and classifications based on the 54th
GST Council meeting. Specifically:
This document clarifies GST rates for railway
air conditioning units and vehicle seats.
Railway AC units (specifically Roof Mounted Package Units or RMPUs) are
classified under HS 8415 and *not* as parts (HS 8607), thus avoiding the 18%
GST rate applied to parts. Instead, the
GST rate applicable to HS 8415 applies.
* **Car seats:** Classified under
HS 9401 with an 18% GST rate. However, to align with the motorcycle seat rate,
car seats will *also* be subject to a 28% GST rate starting October 10, 2024.
Car seats (HS code 9401) are subject to a 28%
GST, effective from the date of the June 2017 notification. Field formations should be informed. Any
implementation difficulties should be reported to the Board.
This Indian Ministry of Finance
circular clarifies the meaning of "as is/as is, where is basis" in
prior GST circulars. It explains that
this phrase, stemming from the 54th GST Council meeting, regularizes past GST
payments made at potentially incorrect rates due to conflicting notification
entries or varying interpretations.
Essentially, if a taxpayer paid a lower GST rate (or claimed exemption)
in the past due to such ambiguities, that payment is now accepted as full
discharge of their liability. However,
those who paid a higher rate are not entitled to a refund. The circular emphasizes that the intent is to
provide clarity and finalize past potentially disputed payments, rather than to
reopen settled transactions.
This document outlines a GST (Goods and
Services Tax) policy for resolving past discrepancies in tax rates applied to
transactions. When there's been confusion about the correct GST rate and
taxpayers have paid different rates (including zero) for the same supply, the
government will regularize the situation on an "as is, where is"
basis. This means that whatever rate was
paid, even if lower than the ultimately determined correct rate, will be
considered sufficient for the period before the clarification. No refunds will be issued to those who paid
the higher rate, and no additional tax will be collected from those who paid
the lower rate, *except* in cases where no tax was paid at all. In those cases, the correct tax will be
recovered. Several illustrations are
provided to demonstrate the application of this policy. The document concludes with instructions for
disseminating this policy to relevant field offices.
This circular from the Indian
Ministry of Finance clarifies the implementation of subsections (5) and (6) of
section 16 of the CGST Act, 2017, concerning input tax credit deadlines. These subsections, introduced retrospectively
by the Finance (No. 2) Act, 2024, extend the time limit for claiming input tax
credit in specific cases. Subsection (5)
allows credit claims until November 30, 2021, for invoices from financial years
2017-18 through 2020-21. Subsection (6) addresses situations where registration
is cancelled and later revoked, clarifying that the input tax credit can be
availed if it wasn't restricted under subsection (4) before cancellation.
Changes to the GST law allow businesses whose
registrations were cancelled to claim input tax credit (ITC) on invoices or
debit notes up to a certain period, either related to the financial year or the
cancellation/revocation period. However,
no refunds will be issued for previously reversed ITC or paid taxes due to this
retrospective change. A special process
has been established for rectifying orders related to wrongly denied ITC claims
due to the prior law, and the tax board is clarifying how businesses and tax
authorities should handle these changes. Essentially, eligible businesses can
now claim previously disallowed ITC, but won't receive refunds for past
payments.
This document outlines procedures related to
the retrospective application (from July 1, 2017) of subsections (5) and (6) of
section 16 of the CGST Act, concerning input tax credit. It details how different authorities should
handle cases depending on their stage of progression:
* **Post-demand notice,
pre-order:** If a demand notice has been issued but the Adjudicating Authority
hasn't issued an order, the Authority must consider the amendments before
issuing their order (under section 73/74).
* **Appeal pending:** If an appeal
is pending with the Appellate Authority (under section 107), the Authority must
consider the amendments before issuing their order.
* **Revision pending:** If a revision is pending with the Revisional
Authority (under section 108), the Authority must consider the amendments
before issuing their order.
* **Order issued, no further
appeal:** If an order (under section 73/74/107/108) has been issued and no
further appeal has been filed, the document is incomplete and doesn't specify
the action to be taken. It cuts off
mid-sentence.
Taxpayers who have received a demand order
(under CGST Act sections 73, 74, 107, or 108) for wrongly availed input tax
credit (ITC) due to contravention of section 16(4), but are now eligible for
that ITC under section 16(5) or 16(6), can apply for rectification. This applies only if an appeal has *not* been
filed. Applications must be filed
electronically via www.gst.gov.in within six months of the notification date
(08.10.2024, Notification No. 22/2024 – Central Tax). Specific instructions are provided for
navigating the portal based on the section under which the original order was
issued, and Annexure A of the notification must be uploaded with the
application.
A special procedure allows rectification
applications for CGST Act orders (sections 73, 74, 107, 108) within six months
of the notification (No. 22/2024, dated 08.10.2024), specifically for cases
involving previously disallowed input tax credit due to contravention of
Section 16(4), now allowed under Section 16(5) or (6). The officer who issued the original order
handles the rectification, aiming to decide within three months. Adverse rectifications require adherence to
natural justice principles. Rectified orders can be appealed (Sections 107 or
112). No refunds or reversed ITC are
available for taxes paid or ITC reversed due to the original Section 16(4)
contravention. Rectification summaries
are uploaded in FORM DRC-08 (for sections 73/74) or FORM GST APL-04 (for
sections 107/108). When rectifying,
officers must consider other grounds for ITC denial beyond the original Section
16(4) issue.
If a taxpayer needs to rectify an order NOT
related to wrong input tax credit availment due to contravention of section
16(4) of the CGST Act (and where such credit is now available under section
16(5) or 16(6)), they must file a rectification application under section 161,
not the special procedure under Notification No. 22/2024. Applications filed incorrectly under the
special procedure will be rejected.
Trade notices will publicize this clarification.
This corrigendum clarifies that the
refund restrictions mentioned in Circular No. 237/31/2024-GST do *not* apply to
pre-deposits made by taxpayers for appeals under section 107(6) or 112(8) of
the CGST Act, if the taxpayer wins the appeal.
In other words, if a taxpayer wins an appeal and had made a pre-deposit,
they are entitled to a refund of that pre-deposit, regardless of the
restrictions outlined in the original circular.
This circular from the Indian
Ministry of Finance clarifies the implementation of Section 128A of the CGST
Act, which allows for waiving interest and/or penalties on certain tax demands
from financial years 2017-18, 2018-19, and 2019-20. Key details include:
* **Deadlines:** Full tax payment is required by March 31,
2025, to qualify for the waiver. If a redetermination under Section 73 is
needed, payment is due within six months of the redetermination order.
* **Process:** Rule 164 of the CGST
Rules (added by notification 20/2024) outlines the procedures and conditions.
* **Purpose:** The circular
addresses doubts raised by businesses and tax officials to ensure consistent
application of the waiver provisions.
Section 128A of the CGST Act provides waivers
for interest/penalties on demands raised under Section 73 for FYs 2017-18,
2018-19, and 2019-20. This applies to
specific situations involving notices/statements/orders issued under Sections
73, 74, 107, 108, and 113, covering scenarios where proceedings are ongoing or
have reached various stages of appeal.
Taxpayers can file an electronic application: FORM GST SPL-01 if no
order under Section 73 has been issued, or FORM GST SPL-02 if an order under
Section 73 has been issued but no further order under Section 107 or 108
exists. Cases where Section 74 notices
were initially issued but later fall under Section 73 due to appellate
directions are also included.
Taxpayers can apply for waiver of interest or
penalty (or both) related to certain GST demands from July 2017 to March 2020
using form GST SPL-01 or GST SPL-02. GST
SPL-02 is used when a redetermination of tax is ordered.
To be eligible for interest and/or penalty
waivers under Section 128A, taxpayers must pay the demanded tax. For pending adjudications
(notices/statements), payment is made via FORM GST DRC-03. For orders under Section 128A(1)(b) and
(1)(c), payment is against a debit entry in the Electronic Liability Register
(ELR). If payment was already made via
DRC-03, use DRC-03A to adjust the amount against the ELR entry before applying
for a waiver (FORM GST SPL-02). The
initial DRC-03 payment date, not the DRC-03A adjustment date, counts as the
payment date. The deadline is March 31, 2025, or within six months of a
redetermination order under Section 73.
When calculating the tax due, deduct amounts no longer payable due to
retrospective changes in Section 16(5) and (6) concerning input tax credit.
This document outlines procedures for
rectifying GST issues and applying for waivers of interest and/or penalties.
Under Section 128A, taxpayers can apply for
waivers of interest and/or penalties.
Applications are made using FORM GST SPL-01 or -02. If approved, the order is issued in FORM GST
SPL-05 (for SPL-01 applications) or -06 (for SPL-02 applications). If denied,
it's issued in FORM GST SPL-07.
Authorities must issue these orders within the timeframe established in
Rule 164, sub-rule (13), otherwise the application is deemed approved. Approved
SPL-01 applications don't require a summary in FORM GST DRC-07. Approved SPL-02
applications modify existing liabilities.
Waivers granted under Section 128A are conditional upon payment of any
additional tax determined by appellate authorities within three months, failing
which the waiver becomes void.
Applications are processed only after the applicant has paid the
original tax demand (excluding amounts no longer payable due to retrospective
amendments).
Waivers of interest and penalties under
section 128A are available only for specific periods and exclude erroneous
refunds. If interest or penalties are
due outside of these conditions, details must be provided in FORMS GST
SPL-05/06. Applicants have three months
to pay these amounts or the waiver becomes void. While an order granting a waiver (FORM GST
SPL-05) is not appealable, a rejection (FORM GST SPL-07) can be appealed using
FORM GST APL-01. Appeals generally don't
require a pre-deposit if taxes have already been paid, but any remaining
balance due under section 107(6) must be paid.
The appeal's scope is limited to the waiver's applicability, not the
original demand's merit.
This document clarifies procedures related to
appealing rejections of waivers for interest/penalties (under Section
128A). If an appeal against a FORM GST
SPL-07 rejection is successful, the appellate authority uses FORM GST SPL-06 to
modify the liability. If an appeal was
withdrawn before applying for the waiver (FORM GST SPL-02) but the waiver is
later rejected, several scenarios are outlined: (a) If the rejection is upheld
(FORM GST APL-04), the original appeal is restored if the applicant assures (FORM
GST SPL-08) they won't appeal the rejection. (b) If the rejection is overturned
(FORM GST SPL-06 granting the waiver), no further appeal is possible. (c) If no
appeal is filed against the rejection, the original appeal is restored.
Finally, the document clarifies that payments made towards the demand before
the notified date under Section 128A, regardless of when the payment was made
or whether the demand notice was issued, are considered valid towards the
amount payable under Section 128A.
This document addresses FAQs regarding Section
128A, which provides waivers for interest and penalties on certain tax
demands. Key points include:
* **Interest and penalties *cannot*
be offset** against the tax due. Section
128A specifically prohibits refunds for these amounts.
* **Section 128A *does* apply**
even if the tax itself has been paid and the outstanding demand is only for
interest/penalties, *except* for interest related to late filing or
reporting. This latter interest is considered
a self-assessed liability and is not eligible for waiver.
* **Partial payment *does not*
qualify** for a partial waiver. The full
tax amount demanded must be paid to receive any waiver under Section 128A.
* **If a notice covers multiple
periods,** some eligible for the waiver and some not, the taxpayer can still
apply for a waiver on the eligible portions.
Further details are needed for situations where a single demand covers
both eligible and ineligible periods.
To claim a waiver of interest or penalty under
Section 128A when a tax demand (notice/order) spans periods both covered and
not covered by 128A, the **full** demanded amount must be paid. The waiver will only apply to the portion of
the demand related to the period covered by Section 128A. Any remaining interest/penalty for periods
*not* covered by 128A remains payable within three months of the order (FORM
GST SPL-05 or 06) granting the waiver. Failure to pay within three months voids
the waiver.
This document outlines procedures and
consequences related to tax liability waivers under Section 128A of the GST
law.
This document clarifies the application of
Section 128A of the CGST Act, which provides for penalty waivers. Key points include:
* **IGST & Compensation Cess:**
Section 128A benefits apply to IGST and compensation cess, requiring full
payment of all applicable taxes (CGST, SGST, IGST, and cess).
* **Transitional Credit:** Demands for wrongly availed transitional
credit covered under Section 73 or 74 are eligible for Section 128A waiver if
the credit was availed within the covered period.
* **Penalty Waivers:** Section 128A
covers penalties under sections 73, 122, and 125, but *excludes* late fees and
redemption fines.
* **Payment Methods:** Tax payments
for the waiver can be made using ITC (electronic credit ledger), cash
(electronic cash ledger), or a combination of both. However, taxes due under reverse charge or
electronic commerce operator provisions must be paid in cash.
This document clarifies procedures related to
India's Goods and Services Tax (GST) law.
Specifically, it addresses:
* **Waiver of interest/penalties
(Section 128A):** This waiver does *not* apply to import IGST payable under the
Customs Act.
* **Reduced tax demands due to
retrospective changes to Section 16:**
Taxpayers only need to pay the reduced amount after deducting the amount
no longer payable due to the retrospective changes to claim benefits under
Section 128A. This calculation should be detailed in the relevant forms (GST
SPL-01 or GST SPL-02). Taxpayers should
only deduct amounts related *specifically* to the retrospective changes to
Section 16, not other reasons for denied Input Tax Credit (ITC). Finally, rectification applications are *not*
needed for ITC now available due to these retrospective changes.
This Indian Central Tax notification (2/2024,
10/8/2024) clarifies that when applying for a special refund (FORM GST SPL-02)
and having already paid part or all of the tax due (FORM GST DRC-03), the
applicant *must* also file FORM GST DRC-03A to adjust the paid amount against
the outstanding demand (FORM GST DRC-07/08/APL-04). Furthermore, if a demand order (DRC-07/08 or
APL-04) has already been issued and the taxpayer has paid via DRC-03, they must
first adjust that payment against the liability in their Electronic Liability
Register before filing the refund application (SPL-02). The circular requests dissemination via trade
notices and invites feedback on implementation challenges.
This circular from the Indian
Ministry of Finance (Department of Revenue) amends an earlier circular
regarding the jurisdiction of certain tax officers. Notification No. 27/2024-Central Tax
(effective December 1, 2024) expands the All-India jurisdiction of specified
Additional/Joint Commissioners of Central Tax to adjudicate show cause notices
issued by the Directorate General of Goods and Services Tax Intelligence
(DGGI). This addresses situations where
notices involve multiple parties or locations across different tax
jurisdictions, streamlining the process by empowering specific officers to
handle these complex cases regardless of the amount involved.
Directorate General of GST Intelligence (DGGI)
cases will be adjudicated by specific Additional/Joint Commissioners within
Central Tax Commissionerate’s. The
Commissionerate responsible for adjudication is determined by the location of
the principal place of business of the noticee with the highest tax demand in
the show cause notice. A table lists the
designated Commissionerate’s for each Central Tax Zone. If multiple noticees are involved in a single
show cause notice, the highest tax demand determines the adjudicating
authority. Subsequent show cause notices
on the same issue, even with different noticees/PANs, will be handled by the
same adjudicating authority.
This circular clarifies jurisdiction for
adjudicating GST show cause notices. If
a single GSTIN is involved, the jurisdiction lies with the existing authority. If multiple GSTINs are involved across
different jurisdictions, the authority with the highest tax demand in the
notice takes jurisdiction. Furthermore,
for DGGI show cause notices issued before November 25, 2024, and not yet
adjudicated by November 30, 2024, jurisdiction shifts to Additional/Joint
Commissioners of Central Tax with All India jurisdiction, adhering to the
criteria mentioned above. Corrigendum’s
will be issued to these notices. Trade
notices will publicize this change, and feedback on implementation challenges
is requested.
This circular from the Indian
Ministry of Finance clarifies the Input Tax Credit (ITC) rules for e-commerce
operators (ECOs) paying tax under section 9(5) of the CGST Act. ECOs provide two types of supplies: those specified
under section 9(5) (like passenger transport or hotel accommodation) where they
collect and pay tax as if they were the supplier, and their own platform
services for which they charge a fee. The circular clarifies that ECOs *do not*
have to reverse the ITC on inputs/input services used for providing their own
platform services, even if those services facilitate the section 9(5)
supplies. This aligns with the existing
clarification for restaurant services and mandates that the section 9(5) tax
liability be paid in cash, not using ITC.
Electronic Commerce Operators (ECOs) paying
tax under section 9(5) of the CGST Act for specified services are not required
to reverse input tax credit proportionally.
They must, however, pay the full tax liability for supplies under
section 9(5) using only their electronic cash ledger, meaning they cannot use
input tax credit for this specific liability.
They *can* use the credit for other service supplies on their own
account. This clarification also applies
to services specified under section 9(5) covered by Circular 167/23/2021 – GST
dated 17.12.2021.
The Central Board of Indirect Taxes
and Customs (CBIC) issued a clarification regarding input tax credit (ITC)
claims under Ex-Works contracts within the automobile sector. Auto dealers, who typically operate under EXW
contracts with Original Equipment Manufacturers (OEMs), take ownership of
vehicles at the factory gate. They book
invoices and claim ITC upon handover to the transporter, even though the OEM
may arrange transport and insurance. Some field formations have challenged this
practice, arguing that ITC should only be claimed upon physical receipt at the
dealership, leading to show cause notices for alleged wrongful ITC
availment. To ensure uniform
implementation, the CBIC clarified that dealers can claim ITC when the goods
are handed over to the transporter at the OEM's factory gate, as ownership and
responsibility transfer at that point, satisfying the requirements of Section
16(2)(b) of the CGST Act.
Under GST law, a registered person can claim
Input Tax Credit (ITC) only if they have "received" the goods or
services. "Receipt" doesn't
necessarily mean physical possession at the registered person's place of
business, unlike older excise laws.
Goods are considered received if delivered to someone else on the
registered person's instructions, even before or during transit, and regardless
of how the transfer is documented. This
differs from some previous state VAT laws that allowed ITC upon purchase, irrespective
of physical receipt. Essentially,
directing delivery to a third party constitutes receipt for ITC purposes under
GST.
Under an EXW (Ex Works) contract, where the
supplier (OEM) hands over goods to a transporter at their factory gate for
delivery to the recipient (dealer), and the transport is arranged by the OEM on
behalf of the dealer, the goods are considered "received" by the
dealer at the factory gate itself for GST (CGST Act) purposes. This applies even though the dealer
physically receives the goods later. The
dealer can claim input tax credit at this point, provided other conditions of
sections 16 and 17 of the CGST Act are met, including the goods being used for
business purposes. This principle applies to all EXW contracts where goods are
delivered to the recipient or their representative at the supplier's place of
business and ownership transfers upon handover.
Input tax credit (ITC) can only be claimed on
goods used for business purposes.
Diverting goods for non-business use, before or after receiving them,
disqualifies the registered person from claiming ITC. Loss, theft, destruction, write-off, gifting,
or distributing the goods as free samples after receipt also disqualifies ITC
claims. Trade notices will publicize
this clarification.
This circular from the Indian Ministry of Finance clarifies the place of supply for online services provided to unregistered recipients. Many suppliers have incorrectly declared the place of supply as their own location, rather than the recipient's state, leading to revenue flowing to the wrong state. The circular emphasizes that regardless of the supply's value, the place of supply for online services to unregistered recipients is the recipient's state, and suppliers must record this accurately on invoices. This clarification aims to ensure uniform implementation of the relevant sections of the IGST Act and CGST Rules. This text outlines regulations concerning the place of supply and tax invoice requirements for electronic commerce (e-commerce) in India under the GST Act.
* **E-commerce operator
defined:** Anyone owning, operating, or
managing the digital or electronic platform for e-commerce.
* **Place of supply:** For services provided to a *registered*
person, it's their location. For *unregistered* persons, it's their address on
record (if available); otherwise, it's the supplier's location. Exceptions exist (sub-sections 3 to 14 of
Section 12, IGST Act).
* **Tax invoices:** Registered
persons supplying services must issue tax invoices, including details like
description, value, and tax charged.
* **Special invoice requirement for
e-commerce:** For online information/database access/retrieval services, online
money gaming, or *any* service provided by/through an e-commerce operator to an
*unregistered* recipient, the invoice *must* include the recipient's state,
which is deemed their address of record. This applies regardless of the
supply's value. This contrasts with the
general rule where state and address are required only if the unregistered
recipient requests it and the value is under ₹50,000.
For services supplied to unregistered persons,
the place of supply is the recipient's location if their address is known,
otherwise it's the supplier's location.
However, for online money gaming, services provided through an
e-commerce operator, or online information and database access/retrieval
(OIDAR) services, the supplier *must* record the recipient's state on the
invoice, regardless of the supply's value. This state name then counts as the
recipient's address, making the place of supply the recipient's location, even
if their full address is unknown.
Essentially, this clarifies that the place of supply for these specific
online services to unregistered persons is always deemed to be the recipient's
state.
Suppliers of online services, including online
money gaming and OIDAR (Online Information Database Access and Retrieval)
services, but also extending to other services like online subscriptions and
digital services via mobile apps, are **required** to collect and record the
recipient's state on the tax invoice for *all* supplies to unregistered
recipients, regardless of the supply value.
This state information will determine the place of supply for tax
purposes. Suppliers must implement a system to collect this state information
*before* providing the service. Failure to correctly record this information,
including the state name, can result in penalties under CGST Act section
122(3)(e). This clarification expands the
application of the proviso to rule 46(f) of the CGST Rules.
The Indian Ministry of Finance
issued a circular clarifying the GST treatment of vouchers. Due to inconsistencies in interpretation and
application by field formations, the circular addresses industry concerns regarding
whether voucher transactions constitute a supply of goods or services, whether
GST applies to voucher trading by distributors, and the taxability of
unredeemed vouchers. The circular
clarifies these issues by referencing relevant sections of the CGST Act, 2017,
including the definitions of "goods," "services,"
"voucher," and "money."
This text discusses the tax implications of
vouchers, particularly prepaid instruments (PPIs), under India's Central Goods
and Services Tax Act (CGST Act).
Vouchers are considered payment instruments creating an obligation for
suppliers to accept them. The Reserve
Bank of India (RBI) regulates these instruments. "Money" includes RBI-recognized
instruments used to settle obligations.
A key distinction is made between "actionable claims" (claims
to debts or interests in movable property) and "specified actionable
claims" (those related to betting, gambling, etc.). While actionable
claims are generally not considered a supply of goods or services and thus not
taxed under the CGST Act, specified actionable claims are excluded from this
exemption. Prepaid instruments, being a
form of voucher and payment instrument, fall under the purview of the RBI and
are used to purchase goods and services against stored value. The text analyses the interplay between these
definitions to determine the GST implications of various payment instruments.
Vouchers, whether recognized as pre-paid
instruments by the RBI or not, are not considered a supply of goods or services
under GST. If a voucher *is* an
RBI-recognized pre-paid instrument, it's considered "money," which is
specifically excluded from the definition of goods and services. If *not* recognized as a pre-paid instrument,
a voucher is considered an "actionable claim," which is also
generally excluded from the definition of goods and services (except for
specific actionable claims like gambling).
However, the underlying goods or services purchased *with* the voucher
are subject to GST. The document then
goes on to discuss distribution models for vouchers, which are not covered in
this summary.
When distributors act as **principals (P2P)**
buying and selling vouchers at their own discretion, the trading margin is
*not* subject to GST because it's neither a supply of goods nor services. However, when distributors act as **agents**
on behalf of the voucher issuer, receiving commission or fees, they *are* subject to GST on those
commissions/fees as it represents a supply of service to the issuer. Additionally, any separate charges for
services like advertising, co-branding, or customer support provided to the
voucher issuer are also subject to GST.
Unused/unredeemed gift vouchers, referred to
as breakage, are not subject to GST.
Since GST applies only to the supply of goods and/or services, and
breakage involves no redemption or supply, it doesn't qualify as a taxable
event. Further, as there is no
underlying supply, the retained amount from unredeemed vouchers cannot be
considered consideration for a supply. A
circular clarifies that an express or implied agreement for payment is needed
for a taxable supply to exist; therefore, the non-redemption of a voucher does
not constitute a supply, and the breakage amount is not taxable under GST.
This circular announces a new policy regarding
GST on unredeemed vouchers (breakage).
It requests the issuance of trade notices to publicize the policy and
asks that any implementation difficulties be reported. A Hindi version of the circular is
forthcoming.
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