Quick Summary
The GST Council has recommended several changes and clarifications relating to the GST treatment of services across various sectors. The recommendations cover passenger transport using electric vehicles, delivery services through electronic commerce operators (ECOs), motor vehicle leasing, input tax credit (ITC), transportation by helicopters, agricultural support services, research and development, highway projects, and banking transactions.
Recommendations relating to services
1. Passenger transport and rental of motor vehicles using Electric Vehicles
- To provide an option to pay GST at the rate of 5%, with restricted input tax credit, on passenger transport services and rental services of motor vehicles with operators, where the service is supplied using an electric vehicle, and the cost of battery charging is included in the consideration.
2. Transportation and delivery services supplied through Electronic Commerce Operators
- To bring delivery services, other than courier and postal, supplied through an ECO under Section 9 (5) of CGST Act, 2017, where the person supplying such services is not liable for registration under Section 22 (1) of the CGST Act, 2017 and to prescribe GST rate of 5% without ITC for such delivery services;
- To prescribe a GST rate of 5% without ITC for delivery services in relation to goods where such goods are supplied/ordered through an ECO;
- To exclude the GST exemption on the services of transportation of goods to unregistered persons by GTA under Entry 21A of Notification No. 12/2017-Central Tax (Rate), where such services are in relation to goods which are supplied/ordered through an ECO.
3. Motor vehicle leasing transactions
- To clarify the GST treatment of certain statutory and ancillary recoveries such as registration charges, road tax, insurance and FASTag charges incurred by the lessor which are subsequently recovered from the lessee in connection with the leasing of motor vehicles.
4. Input Tax Credit in the same line of business
- To allow limited input tax credit in the same line of business, for the supply of restaurant/outdoor catering services, hotel accommodation services for value up to Rs. 7500 per unit per day, and gym/fitness services in the same manner as is currently available for passenger transportation services, tour operator services and renting of motor vehicles services.
5. Transport of passengers by Helicopters from/to specified states
- To exempt from GST, the services of passenger transportation by helicopter on seat-sharing basis from/to airports/helipads located in north-eastern states, Sikkim and Bagdogra in West Bengal.
6. Storage or warehousing of seeds meant for sowing:
- To exempt from GST, the services by way of storage or warehousing of seeds meant for sowing.
7. Curing of coffee
- To exempt from GST, the agricultural support services of curing coffee provided by the coffee curers to the cultivators.
8. Taxability of the services of Seamen’s Provident Fund Organisation
- To exempt from GST, the services provided by Seamen’s Provident Fund Organisation (SPFO) to persons governed by the Seamen’s Provident Fund Act, 1966.
9. Research & Development Services
- To provide for a simple mechanism of self-certification by the head of institution/organization undertaking research and development services, certifying that the activity is in the nature of research and development and not consultancy, for the purpose of determining eligibility for exemption under Entry 44A of Notification 12/2017 – Central Tax (Rate).
10. Import of services by Indian establishments of foreign shipping lines
- To exempt the import of services by an establishment of a foreign shipping company in India from a related person or any of its establishment outside India, when made without consideration;
- To regularize the past period on “as is where is” basis.
11. Upfront/concession amount paid to NHAI under Toll Operate Transfer Model for highway projects
- To exempt from GST, the services of the grant of exclusive right, license and authority by the Government including local Authority, governmental authority and government entity to the concessionaire for highway projects to demand, collect and appropriate toll fee.
12. Operation and Maintenance services for highway projects under TOT model
- To provide a special procedure regarding the valuation and time of payment of GST on Operation and Maintenance (O&M) services provided by concessionaires to the concessioning authority for highway projects in TOT model.
13. Fund Transfer Pricing mechanism in banks
- To clarify that the notional amount regarded as “interest” in the books of accounts for the activity of notional transfer of funds between the branches of the banks by the head office as part of Funds Transfer Pricing transactions is covered by the definition of “interest”, given in Notification No. 12/2017-Central Tax (Rate).
FAQ :
A 5% GST rate with restricted input tax credit is now an option for passenger transport and motor vehicle rental services using electric vehicles, provided the cost of battery charging is included in the price.
Delivery services, excluding courier and postal, supplied via an ECO will be subject to a 5% GST rate without input tax credit, particularly for services related to goods ordered through an ECO.
Yes, limited input tax credit will be allowed for restaurant, outdoor catering, hotel accommodation (up to £7500 per unit per day), and gym/fitness services, similar to existing provisions for passenger transport and vehicle leasing.
Services of passenger transportation by helicopter on a seat-sharing basis to or from north-eastern states, Sikkim, and Bagdogra in West Bengal will be exempt from GST.
Yes, services related to the storage or warehousing of seeds meant for sowing, and agricultural support services of curing coffee provided by coffee curers, will be exempt from GST.
Exemptions are proposed for the grant of rights for highway projects under the TOT model, and a special procedure for GST on Operation and Maintenance services provided by concessionaires will be introduced.
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