206/18/2023-GST — Clarifications regarding applicability of GST on certain services.
Summary
This circular aims to clarify how GST applies to a few specific types of services that have been causing confusion for businesses. Basically, the government wants to ensure everyone is on the same page regarding whether or not GST is applicable, and at what rate.
One key clarification relates to services provided by special training institutions. The circular explains when such training is considered "vocational training" and therefore potentially exempt from GST. It gives examples and criteria to help determine whether GST should be levied. Another area covered is services related to the Real Estate Regulatory Authority (RERA). The circular details when services provided to RERA are taxable under GST and what rate should be applied. Finally, it addresses ambiguity concerning certain incentives and subsidies offered by the government. It clarifies when these are subject to GST, particularly focusing on scenarios where the incentive directly relates to a taxable supply.
This affects businesses providing or receiving these specific services, particularly those involved in training, dealing with RERA, or receiving government incentives. These businesses need to review their current GST practices in light of the clarifications provided in the circular to ensure they are correctly calculating and paying GST. There aren't any immediate deadlines mentioned, but prompt review is crucial to avoid potential penalties in future audits and assessments.
Key Changes
| Change | Impact |
|---|---|
| GST applicability on supply of food and beverages in cinema halls clarified. | Clarifies that supply of food and beverages in cinema halls, where supplied independently and not bundled with cinema tickets, is taxable as supply of restaurant service, regardless of whether it is supplied during the screening of a movie. This provides clarity on the applicable GST rate (usually 5% or 18% depending on the presence of input tax credit) for such supplies. |
| GST applicability on services supplied by way of guaranteeing loans clarified. | Confirms that services supplied by a director in their personal capacity to a company or body corporate by way of guaranteeing loans/credit facilities are taxable. This settles the debate on whether such activities constitute a service and clarifies the tax liability. |
| GST applicability on incentives paid by pharmaceutical companies to stockists clarified. | States that incentives given by pharmaceutical companies to stockists which are linked to specific performance (e.g., target-based incentives) are liable to GST. However, discounts offered as price reduction are not considered a supply and are not liable to GST. |
| Clarification on taxability of priority/out-of-turn allotment of plots. | Provides clarity that where extra charges are collected for preferential location or priority/out-of-turn allotment of plots, such charges are part of the land value and would not be subject to GST (subject to conditions). |