01 July 2022

47th GST Council Meeting – Highlights of changes in respect of services

The GST Council in its meeting held on 28 and 29 of June 2022 has recommended many changes in the GST rates for various services. Similarly, the Council has also sought to clarify on the rates of GST in respect of various specified services.

Some of the changes and clarifications in respect of services are highlighted below.

It may be noted that the changes in the rate of GST are effective from 18 July 2022.

Rationalization of exemption on services

  • Transport of passengers by air to and from NE states & Bagdogra. Exemption is being restricted to economy class.
  • Common bio-medical waste treatment facilities for treatment or disposal of biomedical waste, like Common Effluent Treatment Plants, shall be taxed at 12% to allow them ITC.
  • Hotel accommodation priced up to INR 1000 per day shall be taxed at 12%
  • Hospital Room rent (excluding ICU) exceeding INR 5000 per day per patient shall be taxed to the extent of the amount charged for the room, at 5% without ITC.
  • Training or coaching in recreational activities relating to arts or culture, or sports. Exemption is being restricted to such services when supplied by an individual.
  • Withdrawal of exemptions from the following services:
    • Transportation by rail or a vessel of railway equipment and material.
    • Storage or warehousing of commodities that attract tax (nuts, spices, copra, jaggery, cotton, etc.).
    • Fumigation in a warehouse of agricultural produce.
    • Services by RBI, IRDA, SEBI, FSSAI.
    • Renting of a residential dwelling to business entities (registered persons).
    • Services provided by the cord blood banks by way of preservation of stem cells.

Other changes in GST rates (transportation)

  • Transport of goods and passengers by ropeways. Rate of tax is being recommended to be reduced from 18% to 5% (with ITC of services).
  • Renting of truck/goods carriage, where cost of fuel is included. Rate of tax is being recommended to be reduced from 18% to 12%.

 Clarifications in relation to GST rate on Services

  • Application fee charged for entrance or for issuance of eligibility certificate for admission or issuance of migration certificate by universities is exempt from GST.
  • Ginned or baled fibre is covered in Entry 24B of Notification No. 12/2017-Central Tax (Rate) under the category of raw vegetable fibres. The exemption under this entry is being rationalized.
  • Services associated with transit cargo both to and from Nepal and Bhutan are covered by an exemption under Entry 9B of Notification No. 12/2017-CT(R).
  • Selling of space for advertisement in souvenirs published in the form of books is eligible for concessional GST at 5%.
  • Allowing choice of location of a plot is part of the supply of long-term lease of plot of land. Therefore, location charges or preferential location charges (PLC) are part of the consideration charged for long-term lease of land and shall get the same treatment under GST.
  • Additional fee collected in the form of higher toll charges from vehicles not having Fastag is essentially payment of toll for allowing access to roads or bridges to such vehicles and shall be given the same tax treatment as given to toll charges.
  • Services in form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF) are covered under the definition of health care services for the purpose of exemption.
  • Sale of land after levelling, laying down of drainage lines etc. is sale of land and does not attract GST.
  • Renting of motor vehicles for transport of passengers to a body corporate for a period (time) is taxable in the hands of body corporate under RCM.
  • The expression ‘public transport’ used in the exemption entry at SI No. 17(d) of Notification No. 12/2017-CT(R), which exempts transport of passengers by public transport other than predominantly for tourism purpose, in a vessel between places located in India, means that such transport should be open to public for point-to-point transport.

Other changes for services

  • Department of Post will be subject to forward charges in respect of all taxable services
  • Good Transport Agency (GTA) is being given option to pay GST at 5% or 12% on forward charge basis.
  • Service provided by an Indian Tour Operator to a foreign resident for a tour partially in India and partially outside India is to be subject to tax proportionate to the tour conducted in India, subject to conditions.

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