Clarifications Regarding Applicability Of GST On Certain Services

Last updated: 01 February 2025

Notice Date : 28 January 2025

Quick Summary

This circular provides clarifications on the applicability of Goods and Services Tax (GST) to certain services. It addresses the levying of penal charges by Regulated Entities (REs), following instructions from the Reserve Bank of India (RBI) dated 18th August 2023. These instructions directed REs to implement penal charges instead of penal interest. The clarifications are based on recommendations from the 55th GST Council meeting held on 21st December 2024.

Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)

North Block, New Delhi
Dated the 28th of January, 2025

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All) / The Principal Director Generals/ Director Generals (All)
Madam/Sir,

Subject: Clarifications regarding applicability of GST on certain services – reg.

Based on the recommendations of the GST Council in its 55th meeting held on 21stDecember 2024, at Jaisalmer, and in exercise of the powers conferred under section 168(1) of the Central Goods and Services Tax Act, 2017, clarifications on various issues are being issued through this Circular, as under:

2.Applicability of GST on penal charges being levied by the Regulated Entities (REs)in view of RBI instructions dated 18.08.2023 directing such Regulated Entities (REs) to levy penal charges in place of penal interest.

Official copy of the circular has been attached

FAQ :

The notification provides clarifications regarding the applicability of GST on certain services, specifically focusing on penal charges levied by Regulated Entities.

The Reserve Bank of India (RBI) issued instructions on 18th August 2023, directing Regulated Entities to levy penal charges in place of penal interest.

These clarifications are based on the recommendations of the 55th GST Council meeting, which was held on 21st December 2024.

The clarifications are being issued by the Department of Revenue, Ministry of Finance, Government of India, under the powers conferred by Section 168(1) of the Central Goods and Services Tax Act, 2017.