239

CHAPTER

Exemptions Under GST

9.1 Introduction
 When a supply of goods and/or services falls within the purview of charging section, such supply is chargeable to
GST. However, for determining the liability to pay the tax, one needs to further check whether such supply of
goods and/or services are exempt from tax.
 Exempt supply has been defined as supply of any goods or services or both which attracts nil rate of tax or which
may be wholly exempt from tax and includes non-taxable supply. Power to grant exemption from GST has been
granted vide section 11 of the CGST Act and vide section 6 of the IGST Act. State GST laws also contain identical
provisions granting power to exempt SGST.
 Under earlier Indirect Tax regime, a larger number of exemptions were enjoyed by the taxpayers. The idea is to
continue the exemption list under GST Regime also. Further, various area based exemptions are not continued
under GST.
 Essential goods/services, i.e. public consumption products/services, have been exempted. Items such as unpacked
food grains, milk, eggs, curd, lassi and fresh vegetables are among the items exempted from GST. Further, essential
services like health care services, education services, etc. have also been exempted.
 In this chapter, we shall discuss the power to grant exemption from tax under CGST Act/IGST Act and list of
services exempt from GST in detail and an overview of the goods exempt from tax.

9.2 Power To Grant Exemption From Tax [Section 11 of The CGST Act
/ Section 6 of IGST Act]
Statutory Provisions

Sec. 11 Power to grant exemption from tax

Sub-sec. Particulars

(1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations
of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified
therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon
with effect from such date as may be specified in such notification.

(2) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations
of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such
order, exempt from payment of tax any goods or services or both on which tax is leviable.

(3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or
applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an
explanation in such notification or order, as the case may be, by notification at any time within one year of issue of
the notification under subsection (1) or order under sub-section (2), and every such explanation shall have effect as if
it had always been the part of the first such notification or order, as the case may be.

Explanation : For the purposes of this section, where an exemption in respect of any goods or services or both from thewhole or
part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall
not collect the tax, in excess of the effective rate, on such supply of goods or services or both.
 240 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

ANALYTICAL VIEW OF THE TOPIC

1. Exemption from payment of tax: The Government is empowered to grant exemption from tax, if it is necessary in
public interest so to do, on recommendation of the GST council, by way of issuance of -
(i) Notification :
 The Government may generally exempt supply of goods and/or services of any specified description
 On recommendation of the GST council
 BY NOTIFICATION
 Either absolutely or subject to such conditions as may be specified in the notification
 Wholly/partly
 With effect from such date as may be specified in such notification.
(ii) Special Order :
 The Government may exempt any goods and/or services on which tax is leviable
 BY SPECIAL ORDER
 On recommendation of the GST Council
 Under circumstances of an exceptional nature to be stated in such order in the public interest.
2. No need to pay tax on goods and/or services on which absolute exemption granted: Where an exemption in
respect of goods and/or services has been granted absolutely, the registered person supplying such goods and/ or
services shall not collect tax on such goods and/or services, in excess of the effective rate.
3. Explanation inserted within 1 year to have retrospective effect: The Government can issue an explanation within
1 year of issue of notification/order of exemption and such explanation shall have effect as if it was a part of the
original notification or order, when it was issued, i.e. explanation so inserted would have retrospective effect.
Note : Similar provisions granting power to exempt IGST have been provided under section 6 of the IGST Act.
Illustration 1 :
When exemption from whole of tax collected on goods or services or both has been granted absolutely, can a person pay
tax?
Answer :
No, the person supplying exempted goods or services or both shall not collect the tax in excess of the effective rate.

9.3 Goods Exempt From GST

A list of items has been notified under section 11(1) of the CGST Act, 2017/section 6(1) of the IGST Act, 2017. These
items have been exempted from whole of the tax. Since GST is a tax for common man, everyday items used by the
common man have been included in the list of exempted items.
Items such as unpacked food grains, milk, eggs, curd, lassi and fresh vegetables are among the items exempted from
GST.
Goods imported by unit/developer in SEZ exempt from IGST: All goods imported by a unit/developer in the Special
Economic Zone (SEZ) for authorised operations are exempt from the whole of the integrated tax leviable thereon under
section 3(7) of the Customs Tariff Act, 1975 read with section 5 of the IGST Act, 2017 [Notification No. 64/2017 –
Customs, dated 05.07.2017].

9.4 List of Services Exempt From GST

I. SPECIFIC SERVICES EXEMPT FROM CGST/IGST
Notification No. 12/2017 CT (R) dated 28.06.2017/ Notification No. 9/2017 IT (R) dated 28.06.2017 unless otherwise
specified, has exempted the following services wholly from CGST / IGST respectively:
 Exemptions Under GST 241

Sr. Description of Services

No.
Health Care Related Services
1. Services by way of -
(a) health care services by a clinical establishment, an authorised medical practitioner or paramedics;
Provided that nothing in this entry shall apply to the services provided by a clinical establishment by
way of providing room [other than Intensive Care Unit (ICU)/Critical Care Unit (CCU)/Intensive
Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU)] having room charges exceeding Rs.
5000 per day to a person receiving health care services. [Proviso inserted by NN. 04/2022 -CT (R), w.e.f.
18.07.2022]
(b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a)
above.
[Entry No. 74 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (zg) under this notification, ‘Health care services’ means any service by way of diagnosis
or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of
medicines in India and includes services by way of transportation of the patient to and from a clinical
establishment, but does not include hair transplant or cosmetic or plastic surgery, except when
undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects,
developmental abnormalities, injury or trauma.
(2) As per clause (s) under this notification, ‘Clinical establishment’ means a hospital, nursing home, clinic,
sanatorium or any other institution by, whatever name called, that offers services or facilities requiring
diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised
system of medicines in India, or a place established as an independent entity or a part of an
establishment to carry out diagnostic or investigative services of diseases.
(3) As per clause (k) under this notification, ‘Authorised medical practitioner’ means a medical practitioner
registered with any of the councils of the recognised system of medicines established or recognised by
law in India and includes a medical professional having the requisite qualification to practice in any
recognised system of medicines in India as per any law for the time being in force.
(4) Paramedics are trained health care professionals, for example, nursing staff, physiotherapists,
technicians, lab assistants, etc.
(5) Recognised system of medicines in India are
(i) Allopathy
(ii) Yoga
(iii) Naturopathy
(iv) Ayurveda
(v) Homeopathy
(vi) Siddha
(vii) Unani
(viii) Any system of medicines that may be recognized by Central Govt.
(6) Rent of rooms provided to in-patients (i.e. patients admitted) in hospitals is also exempt from GST.
[Circular No. 27/01/2018– GST, dated 04.01.2018]
However, if any clinical establishment charges room rent exceeding Rs. 5000 per day, then, room rent
will be chargeable to GST. But, charges for Intensive Care Unit (ICU) / Critical Care Unit (CCU) /
Intensive Cardiac Care Unit (ICCU) / Neo natal Intensive Care Unit (NICU) will be exempt from GST
irrespective of charges. [Proviso inserted by NN. 04/2022 -CT (R), w.e.f. 18.07.2022]
242 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(7) Hospitals hire senior doctors/ consultants/technicians independently, without any contract of such
persons with the patient; and pay them consultancy charges, without there being any employer
employee relationship. Will such consultancy charges be exempt from GST? Will revenue (department)
take a stand that they are providing services to hospitals and not to patients and hence must pay GST?
Answer :
Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees
or not, are healthcare services, which are exempt from GST. [Circular No. 32/06/2018 – GS, dated
12.02.2018]
(8) Retention money: Hospitals charge the patients, say, Rs. 10,000/- and pay to the consultants/
technicians only Rs. 7,500/- and keep the balance for providing ancillary services which include nursing
care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood
pressure, etc. Will GST be applicable on such money retained by the hospitals?
Answer :
Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for
illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India [para
2(zg) of notification No. 12/2017-CT (Rate)]. Therefore, hospitals also provide healthcare services. The
entire amount charged by them from the patients including the retention money and the fee payments
made to the doctors, etc., is towards the healthcare services provided by the hospitals to the patients and
is exempt. [Circular No. 32/06/2018 – GST, dated 12.02.2018]
(9) Food supplied to the patients: Health care services provided by the clinical establishments will include
food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may
be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity
that the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own
canteens and prepare their own food; then no ITC will be available on inputs including capital goods and
in turn if they supply food to the doctors and their staff; such supplies, even when not charged, may be
subjected to GST.
Answer :
Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of
healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or
their attendants or visitors are taxable. [Circular No. 32/06/2018 – GST, dated 12.02.2018]
(10) Whether GST is applicable on services by way of Assisted Reproductive Technology (ART) procedures
such as In vitro fertilization (IVF) ?
Clarification: The abnormality/disease/ailment of infertility is treated using ART procedure such as
IVF. It is clarified that services by way of IVF are also covered under the definition of health care
services for the purpose of above exemption notification [Circular No. 177/09/2022 – GST, dated
03.08.2022].

2. Services by a veterinary clinic in relation to health care of animals or birds. [Entry No. 46 of NN. 12/2017 CT
(R)]

3. Services by way of artificial insemination of livestock (other than horses). [Entry no. 55A of NN 12/2017
CT(R)]

4. Services provided by operators of the common bio-medical waste treatment facility to a clinical
establishment by way of treatment or disposal of bio-medical waste or the processes incidental thereto. [Entry
No. 75 of NN. 12/2017 CT (R), omitted by NN 04/2022 – CT(R), w.e.f. 18.07.2022]
Analysis: W.e.f. 18.07.2022, the services of common bio-medical waste treatment facility is made taxable.

5. Services provided by the cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation. [Entry No. 73 of NN. 12/2017 CT (R), omitted by NN 04/2022 – CT(R), w.e.f.
18.07.2022]
 Exemptions Under GST 243

Analysis: W.e.f. 18.07.2022, the services of cord blood banks is made taxable.

6. Services by an entity registered under section 12AA or 12AB of the Income-tax Act, 1961 by way of charitable
activities. [Entry No. 1 of NN. 12/2017 CT (R)]
Notes : As per clause (r) under this notification, ‘Charitable Activities’ means activities relating to -
(i) public health by way of,-
A. care or counselling of
i. terminally ill persons or persons with severe physical or mental disability;
ii. persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or
B. public awareness of preventive health, family planning or prevention of HIV infection;
(ii) advancement of religion, spirituality or yoga;
(iii) advancement of educational programmes or skill development relating to,
A. abandoned, orphaned or homeless children;
B. physically or mentally abused and traumatized persons;
C. prisoners; or
D. persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife;
Analysis :
(i) In order to claim exemption under this head, following two conditions must be satisfied :
(a) The entity is registered with income tax authorities under section 12AA or 12AB of the Income tax
Act, 1961, and
(b) Only charitable activities performed by such entity are exempt from GST. Other activities shall not be
exempt under this entry.
(ii) It implies that tax is payable on any service other than by way of charitable activities to any person
provided by a charitable institution.
(iii) GST on Residential programmes or camps meant for advancement of religion, spirituality or yoga by
religious and charitable trusts [Circular No. 66/40/2018-GST dated 26.09.2018]
The services provided by entity registered under Section 12AA or 12AB of the Income Tax Act, 1961 by
way of advancement of religion, spirituality or yoga are exempt. Fee or consideration charged in any
other form from the participants for participating in a religious, Yoga or meditation programme or camp
meant for advancement of religion, spirituality or yoga shall be exempt. Residential programmes or
camps where the fee charged includes cost of lodging and boarding shall also be exempt as long as the
primary and predominant activity, objective and purpose of such residential programmes or camps is
advancement of religion, spirituality or yoga. However, if charitable or religious trusts merely or
primarily provide accommodation or serve food and drinks against consideration in any form including
donation, such activities will be taxable. Similarly, activities such as holding of fitness camps or classes
such as those in aerobics, dance, music etc. will be taxable.

7. Services by an old age home run by Central Government, State Government or by an entity registered under
section 12AA or 12AB of the Income-tax Act, 1961 to its residents (aged 60 years or more) against
consideration upto Rs. 25,000/- per month per member, provided that the consideration charged is inclusive
of charges for boarding, lodging and maintenance. [Entry No. 9D of NN 12/2017 CT (R)]

8. Services provided by rehabilitation professionals recognised under the Rehabilitation Council of India Act,
1992 by way of rehabilitation, therapy or counselling and such other activity as covered by the said Act at
medical establishments, educational institutions, rehabilitation centers established by Central Government,
State Government or Union territory or an entity registered u/s 12AA or 12AB of the Income tax Act, 1961.
[Entry No. 74A of NN 12/2017 CT (R)]
244 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

9. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories,
urinal or toilets. [Entry No. 76 of NN. 12/2017 CT (R)]

Illustration 2 :
Mangal Healthcare Hospital provides the following details of amount received from the various services.
Compute the value of taxable services.

S.N. Particulars Amount (Rs.)

1 Amount received towards medical examination and patients admission to critical care 1,00,50,000
units
2 Amount received towards doctor’s visit at home of patients 5,00,000
3 Amount received towards nursing care at home of patients 11,20,000
4 Cosmetic surgery services 8,00,000
5 Cosmetic surgery of patients traumatised by accidents to reconstruct anatomy of body 25,00,000
6 Path-laboratory charges for diagnosis 30,00,000
7 Receipt against cord blood bank services by child care unit 10,00,000
8 Charges for providing common Bio-medical waste treatment facility to other clinical 25,00,000
establishments
9 Receipts from veterinary services section for animals 5,51,000
10 Ambulance service charges 8,49,000
11 Receipts of physiotherapy section covered under paramedics 2,80,000
12 Receipts from Unani treatments, a recognised system of medicine in terms of Section 3,20,000
2(h) of Clinical Establishment Act, 2010
13 Receipts from Mortuary services 5,00,000

Answer : Computation of Value of Taxable Services of Mangal Healthcare Hospital

S.N. Particulars Amount (Rs.)

1 Amount received towards medical examination and patients admission to critical care -
units [Exempt - W.N. (i)]
2 Amount received towards doctor’s visit at home of patients [Exempt - W.N. (ii)] -
3 Amount received towards nursing care at home of patients [Exempt - W.N. (ii)] -
4 Cosmetic surgery services [Taxable - W.N. (iii)] 8,00,000
5 Cosmetic surgery of patients traumatised by accidents to reconstruct anatomy of body -
[Exempt - W.N. (iii)]
6 Path-laboratory charges for diagnosis [Exempt - W.N. (i)] -
7 Receipt against cord blood bank services by child care unit [Taxable - W.N. (iv)] 10,00,000
8 Charges for providing common Bio-medical waste treatment facility to other clinical 25,00,000
establishments [Exempt - W.N. (v)]
9 Receipts from veterinary services section for animals [Exempt - W.N. (vi)] -
10 Ambulance service charges [Exempt - W.N. (vii)] -
11 Receipts of physiotherapy section covered under paramedics [Exempt - W.N. (i)] -
12 Receipts from Unani treatments, a recognised system of medicine in terms of Section -
 Exemptions Under GST 245

2(h) of Clinical Establishment Act, 2010 [Exempt - W.N. (i)]

13 Receipts from Mortuary services [Exempt - W.N. (viii)] -
Total Value of Taxable Services 43,00,000

Working Notes:
(i) Entry No. 74 of Exemption Notification no. 12/2017 CT (R), exempts health care services by clinical
establishment, an authorised medical practitioner and paramedics. Clause (zg) of said notification
covers diagnosis, treatment or care of illness, injury, abnormality, etc. in any recognised system of
medicines in India, under health care services. So, the said service is exempt from tax.
(ii) Entry No. 74 of Exemption NN 12/2017 CT (R), exempts health care services provided by medical
practitioners and paramedics irrespective of place of provision of these services, whether it is hospital or
patient’s home.
(iii) Clause (zg) of Exemption NN 12/2017 CT (R) has specifically excluded hair transplant, cosmetic or
plastic surgery from the scope of the term “health care service”. So, the same will be taxable.
However, when such treatments are undertaken to restore anatomy of the body, then, the same will be
covered under the definition of health care services and thus, it will be exempt in such case.
(iv) Cord Blood Bank services are taxable as Entry No. 73 of Exemption NN 12/2017 CT (R) is omitted by
NN 04/2022 – CT(R), w.e.f. 18.07.2022.
(v) Common Bio-medical waste treatment facility provided to clinical establishments is taxable as Entry
No. 75 of Exemption NN 12/2017 CT (R) is omitted by NN 04/2022 – CT(R), w.e.f. 18.07.2022.
(vi) Services by veterinary clinic are covered by Entry No. 46 of Exemption NN 12/2017 CT (R). So, it is
exempt.
(vii) Ambulance services by way of transportation of patients are specifically covered by Entry No. 74 of
Exemption NN 12/2017 CT (R).
(viii) Mortuary or crematorium services are neither treated as supply of goods nor supply of services as per
para 4 of Schedule III of the CGST Act, 2017. Hence, not liable to GST.

Services Relating to Agriculture

1. Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses,
for food, fibre, fuel, raw material or other similar products or agricultural produce by way of –
(a) agricultural operations directly related to production of any agricultural produce including cultivation,
harvesting, threshing, plant protection or testing;
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying,
cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and
such like operations which do not alter the essential characteristics of agricultural produce but make it
only marketable for the primary market;
(d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
(e) loading, unloading, packing, storage or warehousing of agricultural produce;
Analysis: Agro warehousing including cold storage of fruits, vegetables, etc. is exempt.
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee (APMC) or Board or services provided by a
commission agent for sale or purchase of agricultural produce.
(h) services by way of fumigation in a warehouse of agricultural produce. [omitted by NN 04/2022 –
246 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

CT(R), w.e.f. 18.07.2022]

[Entry No. 54 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (c) under this notification, ‘Agricultural extension’ means application of scientific research
and knowledge to agricultural practices through farmer education or training.
(2) As per clause (d) under this notification, ‘Agricultural produce’ means any produce out of cultivation of
plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw
material or other similar products, on which either no further processing is done or such processing is
done as is usually done by a cultivator or producer which does not alter its essential characteristics but
makes it marketable for primary market.
(3) As per clause (e) under this notification, ‘Agricultural Produce Marketing Committee or Board’ means
any committee or board constituted under a State law for the time being in force for the purpose of
regulating the marketing of agricultural produce.
Analysis :
(1) The activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of
ornamental flowers (floriculture) and horticulture, forestry are included in the definition of agriculture.
Plantation crops like rubber, tea or coffee are also covered under agricultural produce.
(2) For example, Sugarcane is agricultural produce, but, Sugar is not agricultural produce, because it is
manufactured through processes which alter the essential characteristics of farm produce (sugarcane).
(3) Analysis of the term ‘testing’ used clause (a) of this entry: All testing and ancillary activities relating to
testing in relation to agriculture or agricultural produce such as seed certification, technical inspection,
technical testing, analysis, tagging of seeds, rendered during testing of seeds, are covered within the
meaning of testing as mentioned in clause (a) of this entry. Therefore, such services are not liable to GST.
(4) Charges for process of plucking of flowers (say, Rose) from their plant and make it marketable, for sale in
primary market, at agricultural farm will be exempt from GST.
(5) But, charges for such type of processes carried out at some other place, other than agricultural farm, shall
be taxable, although such process does not change essential characteristics of agricultural produce.
(6) Renting of land for “stud farming” is taxable. Because, rearing of horses is not covered under the scope
of this entry.
(7) But, renting of land for poultry farming or for rearing of sheep, shall be exempt from GST, as it is covered
under the scope of this entry.
(8) Rice is not agricultural produce. Paddy is agricultural produce.
Illustration 3 :
Mark Agro Products Ltd., a registered person, furnishes the following details of various services provided by
it in the month of December, 20XX:

Sr. No. Particulars Amount (Rs.)

1 Rearing of Silkworm and Horticulture 2,50,000
2 Plantation of Tea and Coffee 2,00,000
3 Renting of Vacant Land for Performing Marriage Ceremony 4,50,000
4 Sale of Wheat on Commission basis 50,000
5 Sale of Rice on Commission basis 2,00,000

Compute the value of taxable services of Mark Agro Products Ltd. for the month of December, 20XX. Assume
 Exemptions Under GST 247

that time of supply in respect of all activities mentioned above falls in the month of December, 20XX itself.
GST has been charged separately wherever applicable. Give reasons by way of short notes to your answer.
Ans. : Computation of Value of Taxable Service of Mark Agro Products Ltd. for the month of Dec., 20XX

Sr. No. Particulars Amount (Rs.)

1 Rearing of Silkworm and Horticulture [Not taxable, as it is covered under
entry no. 54 of NN 12/2017 CT (R)] Nil
2 Plantation of Tea and Coffee [Not taxable, as it is covered under entry no. 54 Nil
3 Renting of Vacant Land for performing Marriage Ceremony [Taxable, as it is
not covered under any exemption] 4,50,000
4 Sale of Wheat on Commission basis [Not Taxable, as it is covered under entry
no. 54 of NN 12/2017 CT (R)] Nil
5 Sale of Rice on Commission basis [Taxable, as rice is not agricultural produce.
Therefore, not covered under any exemption.] 2,00,000
Total Taxable Value 6,50,000

2. Services by way of fumigation in a warehouse of agricultural produce. [Entry No. 53A of NN 12/2017 CT (R),
omitted by NN 04/2022 – CT(R), w.e.f. 18.07.2022]
Analysis: W.e.f. 18.07.2022, Services by way of fumigation in a warehouse of agricultural produce is made
taxable.

3. Services by way of loading, unloading, packing, storage or warehousing of rice. [Entry No. 24 of NN.
12/2017 – CT (R)]
Analysis: Commission agent of rice is taxable.

4. Services by way of warehousing of minor forest produce. [Entry No. 24A of NN 12/2017 – CT (R)]
Examples of minor forest produce: Trees and leaves, flowers and fruits, and all other parts or produce of
trees, etc. brought from the forest.

5. Services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel
leaves, tendu leaves, coffee and tea. [Entry No. 24B of NN 12/2017 – CT (R)] [omitted words, omitted by NN
04/2022 – CT(R), w.e.f. 18.07.2022]

6. Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing
of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar
products or agricultural produce. [Entry No. 55 of NN. 12/2017 CT (R)]
Clarification on taxability of custom milling of paddy by Rice Millers [Circular No. 19/19/2017-GST, dated
20.11.2017]:
Issue : Whether custom milling of paddy by Rice millers is liable to GST or is exempted under Entry No. 55 of
NN 12/2017 - CT (R)
Clarification : Milling of paddy is not an intermediate production process in relation to cultivation of plants. It
is a process carried out after the process of cultivation is over and paddy has been harvested.
Further, processing of paddy into rice is not usually carried out by cultivators, rather it done by rice millers.
Milling of paddy into rice also changes its essential characteristics. Therefore, milling of paddy into rice
cannot be considered as an intermediate production process in relation to cultivation of plants for food, fibre
or other similar products or agricultural produce.
 248 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

Therefore, in view of the above, it is clarified that milling of paddy into rice is not eligible for exemption
under Entry No. 55 of NN 12/2017 - CT (R) and corresponding notifications issued under IGST and UTGST
Acts.
Further, GST will be liable to be paid only on the processing charges charged by millers for milling of paddy
into rice on job work basis (and not on the entire value of rice).

7. Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and
vegetables which do not change or alter the essential characteristics of the said fruits or vegetables. [Entry No.
57 of NN. 12/2017 CT (R)]

8. Services provided by a goods transport agency [GTA], by way of transport in a goods carriage of Agricultural
Produce, milk, salt and foodgrain including flour, pulses and rice. [Entry No. 21(c) and 21(d) of NN. 12/2017
CT (R)]
9. Services by way of transportation by rail or a vessel from one place in India to another of the Agricultural
Produce, milk, salt and foodgrain including flour, pulses and rice. [Entry No. 20(e) and 20(f) of NN. 12/2017
CT (R)]
10. Services by way of artificial insemination of livestock (other than horses). [Entry no. 55A of NN 12/2017
CT(R)]
11. Services by way of slaughtering of animals. [Entry No. 56 of NN. 12/2017 CT (R), omitted by NN 04/2022 –
CT(R), w.e.f. 18.07.2022]
Analysis: W.e.f. 18.07.2022, Services by way of slaughtering of animals is made taxable.
12. Services provided by the Central Government, State Government, Union territory or local authority by way of
assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of
all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar
products. [Entry No. 63 of NN. 12/2017 CT (R)]
13. Services supplied by electricity distribution utilities by way of construction, erection, commissioning, or
installation of infrastructure for extending electricity distribution network upto the tube well of the farmer
or agriculturalist for agricultural use. [Entry No. 10A of NN 12/2017 CT (R)]
14. Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture,
Co-operation and Farmer’s Welfare by way of cold chain knowledge dissemination. [Entry No. 58 of NN.
12/2017 CT (R)]

Illustration 4 : Mangal Agro Ltd. registered under GST furnishes the following details with respect to the activities
undertaken by them in the month of March, 20XX :

[Link]. Particulars Amount (Rs.)

1) Charges for soil testing of farm land 65,000
2) Charges for training of farmers on use of new pesticides and fertilizers developed
through scientific research 75,000
3) Receipts from Supply of farm labour 83,000
4) Charges for warehousing of potato chips 60,000
5) Charges for warehousing of rice 45,000
6) Charges for seed testing 15,000
7) Renting of vacant land to a stud farm 1,15,000
8) Retail packing and labelling of fruits and vegetables 77,000
9) Commission received on sale of wheat 5,50,000
10) Charges for warehousing of cotton fabrics 1,00,000
 Exemptions Under GST 249

11) Leasing of vacant land to a cattle farm 1,50,000

Compute the value of taxable supply of Mangal Agro Ltd. for the month of March, 20XX if all the above amounts are
exclusive of GST.
Answer : Computation of Value of taxable supply

[Link]. Particulars Amount (Rs.)

1) Charges for soil testing of farm land [Exempt as per Entry No. 54 of NN. 12/2017-CT (R)] Nil

2) Charges for training of farmers on use of new pesticides and fertilizers developed through
scientific research [Exempt as per Entry No. 54 of NN. 12/2017-CT (R)] Nil

3) Receipts from Supply of farm labour [Exempt as per Entry No. 54 of NN. 12/2017-CT (R)] Nil

4) Charges for warehousing of potato chips [Potato chips is not an agricultural

produce,warehousing of the same shall be taxable] 60,000

5) Charges for warehousing of rice [Exempt as per Entry No. 24 of NN. 12/2017-CT (R)] Nil

6) Charges for seed testing [Exempt as per Entry No. 54 of NN. 12/2017-CT (R)] Nil

7) Renting of vacant land to a stud farm [The same will be liable for GST, as rearing of horses
has been specifically excluded from Exemption] 1,15,000

8) Retail packing and labelling of fruits and vegetables [Exempt as per Entry No. 57 of NN.
12/2017-CT (R)] Nil

9) Commission received on sale of wheat [Exempt as per Entry No. 54 of NN. 12/2017-CT (R)] Nil

10) Charges for warehousing of cotton fabrics [Liable to GST] 1,00,000

11) Leasing of vacant land to a cattle farm [Exempt as per Entry No. 54 of NN. 12/2017-CT (R)] Nil

Total Value of Taxable Supply 2,75,000

Education Related Services

1. Services provided -
(a) by an educational institution to its students, faculty and staff;
(aa) by an educational institution by way of conduct of entrance examination against consideration in the form
of entrance fee [item (aa) inserted by NN 02/2018 CT (R), dated 25.01.2018];
(b) to an educational institution, by way of, -
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State
Government or Union territory;
(iii) security or cleaning or house- keeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution;
(v) supply of online educational journals or periodicals.
However, nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution
other than an institution providing services by way of preschool education and education up to higher
secondary school or equivalent.
[Entry No. 66 of NN. 12/2017 CT (R)]
Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing
services by way of, -
250 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(i) pre-school education and education up to higher secondary school or equivalent; or

(ii) education as a part of an approved vocational education course.
Notes :
(1) As per clause (y) under this notification, ‘Educational institution’ means an institution providing services
by way of, -
 pre-school education and education up to higher secondary school or equivalent;
 education as a part of a curriculum for obtaining a qualification recognised by any law for the time
being in force;
 education as a part of an approved vocational education course.
(2) As per clause (h) under this notification, ‘Approved vocational education course’ means, - a course run by
an industrial training institute or an industrial training centre affiliated to the National Council for
Vocational Training or State Council for Vocational Training offering courses in designated trades notified
under the Apprentices Act, 1961 or a Modular Employable Skill Course, approved by the National Council
of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill
Development and Entrepreneurship.
(3) For removal of doubts, it is clarified that the Central and State Educational Boards shall be treated as
Educational Institution for the limited purpose of providing services by way of conduct of examination to
the students. [Inserted by NN 14/2018 – CT (R), w.e.f. 27.07.2018]
(4) For removal of doubts, it is clarified that any authority, board or body set up by the Central Government or
State Government including National Testing Agency for conduct of entrance examination for admission to
educational institutions shall be treated as educational institution for the limited purpose of providing
services by way of conduct of entrance examination for admission to educational institutions. [Inserted by
NN 01/2023 – CT (R) w.e.f. 01.03.2023]
Analysis:
(1) Clarification regarding GST on supply of various services by Central and State Board [such as National
Board of Examination – (NBE)] [Circular No. 151/07/2021-GST, dated 17.06.2021]
1. Services supplied by Central and State Board include entrance examination (on charging a fee) for
admission to educational institution, input services for conducting such entrance examination for
students, accreditation of educational institutions or professional so as to authorise them to provide
their respective services.
2. Illustratively, NBE provides services of conducting entrance examinations for admission to courses
including Diplomat National Board (DNB) and Fellow of National Board (FNB), prescribes courses and
curricula for PG medical studies, holds examinations and grant degrees, diplomas and other academic
distinctions. It carries out all functions as are normally carried out by central or state educational boards
and is thus a central educational board.
3. Further, “Central and State Educational Boards” are treated as Educational Institution for the limited
purpose of providing services by way of conduct of examination to the students.
Therefore, NBE is an ‘Educational Institution’ in so far as it provides services by way of conduct of
examination, including any entrance examination, to the students.
3.1 Following services supplied by an educational institution are exempt from GST vide sl. no. 66 of the
NN 12/2017 - CT (R):
Services provided -
(a) by an educational institution to its students, faculty and staff;
(aa) by an educational institution by way of conduct of entrance examination against consideration
in the form of entrance fee;
3.2 Similarly, services provided to an educational institution, relating to admission to, or conduct of
examination is also exempt from GST [sl. no. 66(b)(iv) of NN 12/2017 - CT (R)].
 Exemptions Under GST 251

4. Taking into account the above, the GST Council has recommended, to clarify as below:
(i) GST is exempt on services provided by Central or State Boards (including the boards such as NBE)
by way of conduct of examination for the students, including conduct of entrance examination for
admission to educational institution [under sl. no. 66(aa) of NN 12/2017 – CT (R)]. Therefore, GST
shall not apply to any fee or any amount charged by such Boards for conduct of such examinations
including entrance examinations.
(ii) GST is also exempt on input services relating to admission to, or conduct of examination, such as
online testing service, result publication, printing of notification for examination, admit card and
questions papers etc, when provided to such Boards [under sl. no. 66(b)(iv) of NN 12/2017 – CT
(R)].
(iii) Further, GST at the rate of 18% applies to other services provided by such Boards, namely of
providing accreditation to an institution or to a professional (accreditation fee or registration fee
such as fee for FMGE screening test) so as to authorise them to provide their respective services.
(2) Services provided by school, colleges, etc. to its students, faculty & staff are exempt from GST, which is
further analysed in detail hereunder.
(3) Services by way of conduct of degree courses by colleges, universities or institutions which lead to grant of
qualifications recognized by law for the time being in force would be covered under exemption.
(4) But, training given by private coaching institutes would not be covered as such training does not lead to
grant of a recognized qualification.
(5) Further, services relating to any qualification recognised by a law of foreign country are not covered in
exemption, hence, taxable.
(6) The services provided by international schools giving international certifications likes international business
schools are services by way of education upto higher secondary schools or equivalent and therefore,
covered under this exemption.
(7) Boarding schools provide service of education coupled with other services like providing dwelling units for
residence and food. In this case, since, the service of providing residential dwelling for use as residence to
any person other than registered person is also covered under entry no. 12 of this exemption list, therefore,
the question of taxability does not arise in such a case. Further, it is exempt also because any service by an
education institution to its students, faculty and staff are exempt from GST (not necessarily relating to
education only).
(8) Further, any service by an educational institution to its students, faculty and staff are exempt from GST (not
necessarily relating to education only). For e.g.:
(i) Service by an education institution to its students, faculty and staff by way of transportation by bus,
etc. are exempt under this entry.
(ii) If any charges are collected from the students by any educational institution in respect of participation
in any campus placement programme, etc., then GST is exempt on such charges.
(9) GST is liable on services provided by educational institutes such as ICAI, IITs, IIMs, etc. charging fees from
prospective employers like corporate house/MNCs, who come to the institutes for recruiting candidates
through Campus interviews, as such services are not covered in the exemption (because these services are
provided by educational institutions to person other than students, faculty & staff).
(10) A course in a college which leads to dual qualification out of which if only one is recognized by law, would
be a case of Bundled service, which is mixed supply as per section 2(74) of the CGST Act. And GST will be
levied after considering the provisions of section 8(b) of the CGST Act.
(11) Any service provided to educational institutions is exempt from GST only if it is covered under item (b) of
this entry.
(12) Further, sub-items (i), (ii) and (iii) of item (b) of this entry (i.e. transportation, catering, security, cleaning
and house-keeping services) is applicable only to educational institution providing services by way of pre-
252 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

school education and education up to higher secondary school or equivalent. Therefore, if services covered
under sub-items (i), (ii) and (iii) of item (b) of this entry (i.e. transportation, catering, security, cleaning and
house-keeping services) are provided to other educational institutions (i.e. colleges, vocational educational
institutions, etc.), then, it will be chargeable to GST. [as per first proviso to this entry]
(13) Further, sub-item (v) of item (b) of this entry (i.e. supply of online educational journals or periodicals) is
applicable only to educational institutions providing services by way of education as a part of a curriculum
for obtaining a qualification recognised by any law for the time being in force (i.e. college, etc.). Therefore, if
online educational journals or periodicals is supplied to other educational institutions (i.e. schools,
vocational educational institutions, etc.), then, it will be chargeable to GST.[as per second proviso to this
entry]
(14) But, sub-item (iv) of item (b) of this entry (i.e. services relating to admission to, or conduct of examination
by, such institution) is applicable to all educational institutions. Therefore, if services covered under sub-
item (iv) of item (b) of this entry (i.e. services relating to admission to, or conduct of examination by, such
institution) are provided to any educational institution, then, it will be exemptfrom GST. [For example,
services provided to ICAI, ICSI, etc. for conduct of examination by any College, school, etc. are exempt from
GST].
(15) Further, any service, which is not covered under item (b) of this entry, provided to any educational
institution shall be chargeable to GST. (For example, advertisement services, telecom services, etc. provided
to any educational institution are taxable.)
(16) Clarifications regarding GST on College Hostel Mess Fees [Circular No. 28/02/2018 – GST, dated
08.01.2018]
The educational institutions have mess facility for providing food to their students and staff. Such facility is
either run by the institution/ students themselves or is outsourced to a third person. Supply of food or
drink provided by a mess or canteen is taxable under GST.
Case I : If the catering service is one of the services provided by an educational institution to its students,
faculty and staff and the said educational institution is covered by the definition clause (y) of NN 12 2017-
CT (R), then, the same is exempt.
Case II : If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone
other than the educational institution, then, it is a supply of service to the concerned educational institution
and attracts GST.
(17) Clarification on GST rate applicable on supply of food and beverage services by educational institution
[Circular No. 85/04/2019- GST, dated 01-01-2019)
Supply of all services by an educational institution to its students, faculty and staff is exempt under NN
12/2017-CT (R), Sl. No. 66. Such services include supply of food and beverages by an educational
institution to its students, faculty and staff. A supply is eligible for exemption under an entry of the said
notification where the description of the service leaves no room for any doubt. Accordingly, it is clarified
that supply of food and beverages by an educational institution to its students, faculty and staff, where
such supply is made by the educational institution itself, is exempt under NN 12/2017 - CT (R), vide Sl. No.
66 w.e.f. 01-07-2017 itself. However, such supply of food and beverages by any person other than the
educational institutions based on a contractual arrangement with such institution is leviable to GST @ 5%.
(18) Clarification regarding applicability of GST on supply of food in Anganwadis and Schools under Mid-
Day Meals Scheme if such supplies are funded by government grants and/or corporate donations
[Circular No. 149/05/2021 - GST, dated 17.06.2021]
1. Entry 66 clause (b)(ii) of NN 12/2017 - CT (R), exempts Services provided to an educational institution,
by way of catering, including any mid-day meals scheme sponsored by the Central Government, State
Government or Union territory. This entry applies to pre-school and schools.
2. Accordingly, as per said entry 66, any catering service provided to an educational institution is exempt
from GST. The entry further mention that such exempt service includes mid- day meal service as
 Exemptions Under GST 253

specified in the entry. The scope of this entry is thus wide enough to cover any serving of any food to a
school, including pre-school. Further, an Anganwadi interalia provides pre-school non- formal
education. Hence, Anganwadi is covered by the definition of educational institution (as pre-school).
3. Accordingly, as per recommendation of the GST Council, it is clarified that services provided to an
educational institution by way of serving of food (catering including mid- day meals) is exempt from
levy of GST irrespective of its funding from government grants or corporate donations [under said
entry 66(b)(ii)]. Educational institutions as defined in the notification include anganwadi. Hence,
serving of food to anganwadi shall also be covered by said exemption, whether sponsored by
government or through donation from corporates.
(19) Services provided by any person to any educational institution in respect of imparting any skill,
knowledge, education or development of course content or any other knowledge - enhancement activity,
whether for the students or the faculty, are taxable.
(20) Building let out to any educational institution is taxable.
(21) Placement services provided to any educational institutions for securing job placements for the students
are not covered in exemption. Hence, taxable.
(22) Security, cleaning or house-keeping services provided to pre-school or school will be exempt from GST
only if these services are performed in these educational institutions. It means, if these services are
performed at any other place other than the place of pre-school or school, then, these services will be
taxable, even if provided to the pre-school or school.
(23) However, catering services provided to pre-school or school will always be exempt from GST irrespective
of place where such catering service is performed.
(24) Clarification on applicability of GST on application fee charged for entrance or the fee charged for
issuance of eligibility certificate for admission or for issuance of migration certificate by educational
institutions [Circular No. 177/09/2022 – GST, dated 03.08.2022]
All services supplied by an ‘educational institution’ to its students are exempt from GST. Consideration
charged by the educational institutes by way of entrance fee for conduct of entrance examination is also
exempt. The exemption is wide enough to cover the amount or fee charged for admission or entrance, or
amount charged for application fee for entrance, or the fee charged from prospective students for issuance
of eligibility certificate to them in the process of their entrance/admission to the educational institution.
Services supplied by an educational institution by way of issuance of migration certificate to the leaving or
ex- students are also covered by the exemption. Accordingly, such activities of educational institution are
covered by exemption under Sl. No. 66 of NN. 12/2017 - CT (R) and thus, exempt from GST.

2. Services by way of giving on hire motor vehicle for transport of students, faculty and staff, to a person providing
services of transportation of students, faculty and staff to an educational institution providing services by way of
pre-school education and education upto higher secondary school or equivalent.
[Entry No. 22(c) of NN 12/2017 CT (R)]

3. Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to
their students, by way of the following educational programmes, except Executive Development Programme :
(a) 2 year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management,
to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian
Institute of Management;
(b) fellow programme in Management;
(c) 5 year integrated programme in Management.
[Entry No. 67 of NN. 12/2017 CT (R)] [omitted by NN 28/2018 – CT (R), dated 31.12.2018]
Applicability of GST on various programmes conducted by the Indian Institutes of Management (IIMs)
[Circular No. 82/01/2019- GST, dated 01.01.2019]
254 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(1) The Indian Institutes of Management Act, 2018 came into force on 31.01.2018. With effect from 31.01.2018,
all IIMs are “educational institutions” as defined under NN. 12/2017- CT(R) as they provide education as a
part of a curriculum for obtaining a qualification recognised by law for the time being in force.
(2) At present, IIMs are providing various long duration programs (1 year or more) for which they award
diploma/ degree certificate duly recommended by Board of Governors as per the power vested in them
under the IIM Act, 2017. Therefore, it is clarified that services provided by IIMs to their students in all such
long duration programs (1 year or more) are exempt from levy of GST.
(3) List of examples of long duration programs recognised under IIM Act, 2017 offered by IIM Ahmedabad
[which are exempt from GST]:
(i) Post-Graduate Programme (PGP) – 2-year program
(ii) Post-Graduate Programme in Food and Agri-Business Management (PGP-FABM) – 2-year program
(iii) Fellow Programme in Management (FPM) – 4 to 5-year program
(iv) Post-Graduate Programme in Management for Executives (PGPX) – 12 months (1 year) full time
program
(v) ePost-Graduate Programme (ePGP) – 2-year online program.
(4) IIMs also provide various short duration/ short term programs for which they award participation
certificate to the executives/ professionals as they are considered as “participants” of the said programmes.
These participation certificates are not any qualification recognized by law. Such participants are also not
considered as students of Indian Institutes of Management. Services provided by IIMs as an educational
institution to such participants is not exempt from GST. Such short duration executive programs attract
standard rate of GST @ 18%.
(5) List of examples of short duration executive development programs offered by IIM Ahmedabad which are
available to participants [which are not exempt from GST]:
(i) Armed Forces Programme
(ii) Faculty Development Programme
(iii) Executive Education
a. Customized Executive Programmes
b. Open Enrolment Programme.
(6) In nut shell, all long duration programs (one year or more) conferring degree/ diploma as recommended by
Board of Governors as per the power vested in them under the IIM Act, 2017 including one- year Post
Graduate Programs for Executives are exempt from GST. And, all short duration executive development
programs or need based specially designed programs (less than one year) which are not a qualification
recognized by law are not exempt from GST.
Clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted
by Maritime Training Institutes of India – [Circular No. 117/36/2019 – GST, dated 11.10.2019]
Issue : Applicability of GST exemption to the Directorate General of Shipping approved maritime courses
conducted by the Maritime Training Institutes of India.
1. GST exemption on services supplied by an educational institution would be available, if it fulfils the criteria
that the education is provided as part of a curriculum for obtaining a qualification/degree recognized by
law.
2. The Maritime Training Institutes and their training courses are approved by the Director General of
Shipping which are duly recognised under the provisions of the Merchant Shipping Act, 1958 read with the
Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014.
Therefore, the Maritime Institutes are educational institutions under GST Law and the courses conducted
by them are exempt from levy of GST. The exemption is subject to meeting the conditions specified at Sl. No.
66 of the NN 12/2017 - CT(R).
 Exemptions Under GST 255

4. Any services provided by, -

(a) the National Skill Development Corporation set up by the Government of India;
(b) a Sector Skill Council approved by the National Skill Development Corporation;
(c) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation;
(d) a training partner approved by the National Skill Development Corporation or the Sector Skill Council, in
relation to –
(i) the National Skill Development Programme implemented by the National Skill Development
Corporation; or
(ii) a vocational skill development course under the National Skill Certification and Monetary Reward
Scheme; or
(iii) any other Scheme implemented by the National Skill Development Corporation.
[Entry No. 69 of NN. 12/2017 CT (R)]
5. Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya
Grameen Kaushalya Yojana (DDUGKY) implemented by the Ministry of Rural Development, Government of
India by way of offering skill or vocational training courses certified by the National Council for Vocational
Training. [Entry No. 71 of NN. 12/2017 CT (R)]

6. Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of Skill
Development and Entrepreneurship by way of assessments under the Skill Development Initiative Scheme.
[Entry No. 70 of NN. 12/2017 CT (R)]

7. Services provided to the Central Government, State Government, Union territory administration under any
training programme for which 75% or more of the total expenditure is borne by the Central Government, State
Government, Union territory administration. [Entry No. 72 of NN. 12/2017 CT (R)]
Clarification on Coaching services supplied by coaching institutions and NGOs under the central sector
scheme of ‘Scholarships for students with Disabilities’ where entire expenditure is provided by Government
to coaching institutions/NGOs by way of grant in aid [Circular No. 164/20/2021 - GST, dated 06.10.2021]
As recommended by the GST Council, it is clarified that services provided by any coaching institutions/ NGOs
under the central scheme of ‘Scholarships for students with Disabilities’ where total expenditure is borne by the
Government is covered under entry 72 of NN 12/2017 - CT (R) and hence, exempt from GST.

8. Services by way of training or coaching in -

(i) recreational activities relating to arts or culture, by an individual, or
(ii) sports by charitable entities registered under section 12AA or 12AB of the Income-tax Act.
[Entry No. 80 of NN. 12/2017 CT (R)]
Analysis:
1. The exemption benefit in relation to coaching or training in recreational activities relating to arts or culture
(i.e. all forms of dance, music, painting, sculpture making, theatre, etc.) is available only if such training or
coaching is provided by an Individual.
2. The exemption benefit in relation to coaching or training relating to sports is available only if such training
or coaching is provided by a charitable entity registered under section 12AA or 12AB of the Income-tax Act.

Illustration 5 :
Mangal Education Pvt. Ltd. owning various educational institutions provides the details about various receipts :
(A) Receipts of Mangal Public School
(i) Tution fee from students - Rs. 10,00,000
(ii) Hostel fee from students - Rs. 5,50,000
(iii) Staff quarter rent received from faculties - Rs. 1,20,000
256 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(iv) Receipts from pre-nursery section - Rs. 1,00,000

(v) Mess charges from students - Rs. 1,60,000
(vi) Bus fee from students - Rs. 1,80,000
(vii) “Mind Parichay” career counselling fees from students - Rs. 25,000
(viii) Sale of admission forms of school - Rs. 40,000
(ix) Fee for participation of educational seminar from students - Rs. 20,000
(B) Receipts of Mangal International School affiliated to University of Australia
(i) Tution fee for high school diploma recognised by Indian government - Rs. 5,00,000
(ii) Tution fee for High School Diploma recognised by Government of Australia, equivalent to higher
secondary education in India - Rs. 7,00,000
(C) Receipts from Mangal Technological College affiliated to University of U.K.
(i) Course fee for ‘Masters in Technology’ recognised degree course approved by Ministry of H.R.D.,
India - Rs. 20,00,000
(ii) Course fee for ‘Masters in Technology’ recognised degree course of U.K. - Rs. 45,00,000
(iii) Campus Placement Participation fee from students covered
(a) in course of point (i) - Rs. 1,00,000
(b) in course of point (ii) - Rs. 60,000
(iv) Campus Placement Participation fee from prospective employer companies
(a) For students of course of point (i) - Rs. 3,00,000
(b) For students of course of point (ii) - Rs. 4,00,000
(v) Fee for I.T. training, which is a part of a curriculum for obtaining degree
(a) Under course of point (i) - Rs. 3,00,000
(b) Under course of point (ii) - Rs. 4,00,000
(vi) Donation received from various persons - Rs. 20,00,000
(D) Receipts from Mangal Training Centre for football registered under section 12AA or 12AB of the
Income-tax Act
(i) Training fee - Rs. 3,80,000
(ii) Transportation fee from students - Rs. 60,000
(iii) Hostel fee from students - Rs. 10,000
(iv) Staff quarter rent from faculties - Rs. 1,00,000
(E) Receipts from Mangal Coaching Classes for CA, CS and CMA students
(i) Coaching fee - Rs. 10,00,000
(ii) Sale of admission forms - Rs. 50,000
(F) Receipts from Mangal Industrial Training Center (ITC) affiliated to the National Council for Vocational
Training offering approved course
(i) Training fee from students - Rs. 2,50,000
(ii) Bus fee from students and faculty - Rs. 30,000
Calculate the value of taxable services for Mangal Education Pvt. Ltd.
Answer : Computation of GST Liability of M/s Mangal Education Pvt. Ltd.

Particulars Amount (Rs.)

 Exemptions Under GST 257

(A) Receipts of Mangal Public School

(i) Tution fee from students [Exempt, as it is covered under entry no. 66 of the Nil
Exemption Notification No. 12/2017 CT (R)]
(ii) Hostel fee from students [Exempt, as it is covered under entry no. 12 and Nil
entry no. 66 of the Exemption Notification No. 12/2017 CT (R)]
(iii) Staff quarter rent received from faculties [Exempt - Same as (ii) above] Nil
(iv) Receipts from pre-nursery section [Exempt - Entry 66, NN 12/2017 CT (R)] Nil
(v) Mess charges from students [Exempt - Entry 66, NN 12/2017 CT (R)] Nil
(vi) Bus fee from students [Exempt - Entry 66, NN 12/2017 CT (R)] Nil
(vii) “Mind Parichay” career counselling fees from students [Exempt - Entry 66, Nil
NN 12/2017 CT (R)]
(viii) Sale of admission forms of school [Exempt - Entry 66, NN 12/2017 CT(R)] Nil
(ix) Fee for participation of educational seminar from students[Exempt - Entry Nil
66, NN 12/2017 CT (R)]
(B) Receipts of Mangal International School affiliated to University of Australia
(i) Tution fee for high school diploma recognised by Indian government Nil
[Exempt - Entry 66, NN 12/2017 CT (R)]
(ii) Tution fee for High School Diploma recognised by Government of Australia, Nil
equivalent to higher secondary education in India [Exempt - Entry 66, NN
12/2017 CT (R)]
(C) Receipts from Mangal Technological College affiliated to University of U.K.
(i) Course fee for ‘Masters in Technology’ recognised degree course approved Nil
by Ministry of H.R.D., India [Exempt - Entry 66, NN 12/2017 CT (R)]
(ii) Course fee for ‘Masters in Technology’ recognised degree course of 45,00,000
U.K.[Taxable, since it is not a recognised course as per Entry 66, NN
12/2017CT (R), so, it is not covered under exemption list and further it is not
covered by any other exemption notification also]
(iii) Campus Placement Participation fee from students covered
(a) in course of point (i) [Exempt - Entry 66, NN 12/2017 CT (R)] Nil
(b) in course of point (ii) [Taxable, since it is not provided by “educational 60,000
institution” as defined in clause (y) of NN 12/2017 CT (R)]
(iv) Campus Placement Participation fee from prospective employer companies
(a) For students of course of point (i) [Taxable, since the services are not 3,00,000
provided to students, faculties or staff, so not covered under Entry 66,
NN 12/2017 CT (R)]
(b) For students of course of point (ii) [Taxable - Refer (iii) (b) and (iv) (a) 4,00,000
above]
(v) Fee for I.T. training, which is a part of a curriculum for obtaining degree
(a) Under course of point (i) [Exempt - Entry 66, NN 12/2017 CT (R)] Nil
(b) Under course of point (ii) [Taxable - Refer point (iii)(b) above] 4,00,000
(vi) Donation received from various persons [It is not a consideration for any Nil
service, so not taxable]
(D) Receipts from Mangal Training Centre for Football registered under Section
12AA or 12AB of the Income-tax Act
(i) Training fee [Exempt - Entry 80, NN 12/2017 CT (R)] Nil
258 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(ii) Transportation fee from students [Taxable - Not covered by exemption 60,000
notification, since it is not a education institution as defined in clause (y) of
NN 12/2017 CT (R), and only services by way of training or coaching is
covered in entry 80, NN 12/2017 CT (R)]
(iii) Hostel fee from students [Taxable, because entry no. 14 of the Exemption NN 10,000
12/2017 - CT(R), is omitted] [Discussed in subsequent Topics of this chapter]
(iv) Staff quarter rent from faculties [Exempt, as it is covered under entry no. 12 of Nil
the Exemption Notification No. 12/2017 CT (R)] [Discussed in subsequent
Topics of this chapter]
(E) Receipts from Mangal Coaching Classes for CA, CS and CMA students
(i) Coaching fee [Taxable, since Mangal Coaching Classes is not “educational 10,00,000
institution” as defined in clause (y) of NN 12/2017 CT (R)]
(ii) Sale of admission forms [Taxable, since Mangal Coaching Classes is not 50,000
“educational institution” as defined in clause (y) of NN 12/2017 CT (R)]
(F) Receipts from Mangal Industrial Training Center (ITC) affiliated to the
National Council for Vocational Training offering approved course
(i) Training fee from students [Exempt - Entry 66, NN 12/2017 CT (R)] Nil
(ii) Bus fee from students and faculty [Exempt] Nil
Total Value of Taxable Services 67,80,000

llustration 6 :
Mind Parichay Education Services Ltd. is engaged in Providing Various Services to educational institutions
furnishes following information :
Sr. No. Particulars Amount (Rs.)
(i) Services by way of Transportation of students faculty and staff to Mangal 2,00,000
Public School
(ii) House keeping services to Mangal Coaching Center 2,00,000
(iii) House keeping service to Mangal College of Commerce 3,00,000
(iv) Transportation Service to Mangal Training Center of Arts 50,000
(v) Catering Services to Mangal International School of Business providing 1,00,000
recognized degree course
(vi) Conduct of Examination for Coaching Center 20,000
(vii) Conduct of Examination for ICAI 1,00,000
(viii) Security services to Mangal International College providing diploma 80,000
recognized by U.K. Government
(ix) Renting of Property to Mangal Pre-nursery school 1,20,000
(x) Renting of Property to Mangal Classes 1,80,000
(xi) Conducting counselling sessions for students of Mangal Public School 1,60,000
(xii) Conducting placement services for ICAI 65,000
(xiii) Catering service to pre-primary school under Mid-day Meal Scheme 30,000
(xiv) Admission consultancy to Mangal Public School 80,000
(xv) Admission consultancy fee from students directly, for admission to Mangal 1,20,000
Public School
 Exemptions Under GST 259

Calculate the value of taxable services for Mind Parichay Education Services Ltd.
Solution:

Sr. No. Particulars Amount (Rs.)

(i) Services by way of Transportation of students faculty and staff to Mangal Nil
Public School [Exempt – WN (1)]
(ii) House keeping services to Mangal Coaching Center [Taxable – WN(2)] 2,00,000
(iii) House keeping service to Mangal College of Commerce [Taxable – WN(3)] 3,00,000
(iv) Transportation Service to Mangal Training Center of Arts [Taxable – WN(4)] 50,000
(v) Catering Services to Mangal International School of Business providing 1,00,000
recognized degree course [Taxable – WN(3)]
(vi) Conduct of Examination for Coaching Center [Taxable – WN(2)] 20,000
(vii) Conduct of Examination for ICAI [Taxable – WN(5)] NIL
(viii) Security services to Mangal International College providing diploma 80,000
recognized by U.K. Government [Taxable – WN(2)]
(ix) Renting of Property to Mangal Pre-nursery school [Taxable – WN(6)] 1,20,000
(x) Renting of Property to Mangal Classes [Taxable – WN(6)] 1,80,000
(xi) Conducting counselling sessions for students of Mangal Public School 1,60,000
[Taxable – WN(6)]
(xii) Conducting placement services for ICAI [Taxable – WN(6)] 65,000
(xiii) Catering service to pre-primary school under Mid-day Meal Scheme NIL
[Exempt – WN(1)]
(xiv) Admission consultancy to Mangal Public School [Exempt – WN(1)] NIL
(xv) Admission consultancy fee from students directly, for admission to Mangal 1,20,000
Public School [Taxable – WN(7)]
Value of Taxable Services 13,95,000

Working Notes :
1. Entry no. 66 of NN 12/2017 CT (R) (Mega Exemption Notification) exempts certain services provided to
educational institutions [defined in clause (y) of said notification]. Since, the service is covered by this entry
no. 66 and the institution is also covered under the definition of educational institution, therefore, the
service is exempt from GST.
2. Institution is not covered under definition of educational institution of clause (y) of NN 12/2017, so, it is
taxable.
3. The service is not covered by entry 66 of NN 12/2017 and also any other exemption notification, so taxable.
This service is exempt only if it is provided to an educational institution providing services
4. Institution is not covered by definition of educational institution given in clause (y) of NN 12/2017. So, it is
taxable. (Further, entry 80 of NN 12/2017 covers only training or coaching services by such institutes.)
5. If services covered under sub-item (iv) of item (b) of entry no. 66 of NN 12/2017 CT (R) (i.e. services relating
to admission to, or conduct of examination by, such institution) are provided to any educational institution,
then, it is exempt from GST.
6. The service is not covered by entry 66 of NN 12/2017 and also any other exemption notification, so taxable.
7. As per entry 66(b) of NN 12/2017, certain services provided to educational institution are exempt. Though
the service is covered under the entry and the institution is also covered under the definition, but, since the
260 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

services are provided to students directly, so it is taxable.

Illustration 7 : Determine the taxability under various independent cases :
1. Services provided by Mr. Rohit to Mangal Public School to teach accounts to commerce students. Mr. Rohit
is not an employee of the school for Rs. 5,00,000.
2. Development of course content for Mangal college of technology by Dr. Abhishek Goyal for Rs. 8,00,000.
3. Training of staff of Mangal Industrial Training Institute (Approved ITI for vocational training by CA. Vimal
Surana) - Rs. 10,00,000.
Answer :

Sr. No. Particulars

1 Services to school for teaching accounts (WN) Taxable
2 Development of course content of college (WN) Taxable
3 Training of staff of approved ITI (WN) Taxable

Working Note : Entry no. 66 of NN. 12/2017 CT (R) provides exemption for services provided to educational
institution for various services. Since, none of the services specified in notification includes the given service. So,
it is taxable.

Entertainment and Sports Related Services

1. Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo.
[Entry No. 79 of NN. 12/2017 CT (R)]
Note: Under this notification, ‘museum, national park, wildlife sanctuary, tiger reserve and zoo’ shall have
the same meaning as assigned to it in the Wild Life (Protection) Act, 1972.
2. Services by way of admission to a protected monument so declared under the Ancient Monuments and
Archaeological Sites and Remains Act 1958 or any of the State Acts, for the time being in force.
[Entry No. 79A of NN 12/2017 CT (R)]
Analysis :
(i) An ancient monument which is declared to be of national importance by or under Ancient and Historical
Monuments and Archaeological Sites and Remains (Declaration of National Importance) Act, 1951, or by
section 126 of the States Re-organisation Act, 1956 is called a protected monument. More than 3,600
historical monuments and archaeological sites have been declared as protected monuments in India. [E.g..
– Taj Mahal in Agra, Jantar Mantar in Delhi, etc.]
(ii) No GST will be levied on the price charged for Entry ticket of these protected monuments as per this entry
no. 79A of NN 12/2017 CT (R).
3. Services by way of right to admission to -
(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event other than a recognised
sporting event;
(c) recognised sporting event;
(d) planetarium,
where the consideration for right to admission to the events or places as referred to in items (a), (b), (c) or (d)
above is not more than Rs. 500 per person.
[Entry No. 81 of NN. 12/2017 CT (R)]
Note : As per clause (zv) under this notification, ‘Recognised sporting event’ means any sporting event,-
(i) organised by a recognised sports body where the participating team or individual represent any district,
State, zone or country;
 Exemptions Under GST 261

(ii) organised –
(A) by a national sports federation, or its affiliated federations, where the participating teams or
individuals represent any district, state or zone;
(B) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of
India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics
Bharat;
(C) by Central Civil Services Cultural and Sports Board;
(D) as part of national games, by Indian Olympic Association; or
(E) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;
4. Services by an artist by way of a performance in folk or classical art forms of -
(a) music, or
(b) dance, or
(c) theatre,
if the consideration charged for such performance is not more than Rs. 1,50,000/-. However, the exemption shall
not apply to service provided by such artist as a brand ambassador.
[Entry No. 78 of NN. 12/2017 CT (R)]
Note : As per clause (m) under this notification, ‘Brand ambassador’ means a person engaged for promotion or
marketing of a brand of goods, service, property or actionable claim, event or endorsement of name, including
a trade name, logo or house mark of any person.
Analysis:
(i) All other activities by an artist in other art forms e.g. western music or dance, modern theatres,
performance of actors in films or television serials would be taxable.
(ii) Similarly, activities of artists in still art forms e.g. painting, sculpture making, etc. are taxable.
(iii) Services provided by such an artist as brand ambassador is also taxable.
(iv) Services by an artist by way of a performance in folk or classical art form of (a) music, or (b) dance, or (c)
theatre, are exempt only if the consideration charged for such performance is upto Rs. 1,50,000/- per
performance.
(v) In case, where consideration charged for such service is Rs. 1,51,000/-, then, GST would be chargeable and
it will be charged on entire Rs. 1,51,000/-.
Illustration 8 :
Mr. Nawab, a performing artist, provides the following information relating to December, 20XX receipts from :
Particulars Amount (Rs.)
Performing classical dance 98,000
Performing in television serial 2,80,000
Services as brand ambassador 12,00,000
Coaching in recreational activities relating to arts 2,10,000
Activities in sculpture making 3,10,000
Performing western dance 90,000
Determine the value of taxable services by Mr. Navab for December, 20XX. GST has been charged separately,
wherever applicable. Mr. Navab is registered in GST.
Answer :
Computation of Value of Taxable Services and GST Payable by Mr. Nawab for December, 20XX
[Link]. Particulars Amount (Rs.)
1 Performing classical dance [Exempted vide Entry No. 78 of NN. 12/2017 CT (R)] Exempt
 262 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

2 Performing in television serial [Taxable] 2,80,000

3 Services as Brand ambassador [Taxable, as it is excluded from Entry No. 78 of
NN. 12/2017 CT (R)] 12,00,000
4 Coaching in recreational activities relating to arts by an individual [Exempted
vide Entry No. 80 of NN. 12/2017 CT (R)] Exempt
5 Activities in sculpture making [Taxable, as it is a receipt from performing
activities in sculpture making, not from training or coaching in sculpture making] 3,10,000
6 Performing Western dance [Taxable] 90,000
Total Value of Taxable Services 18,80,000

Illustration 9 :

Mangal Pvt. Ltd. manufactures mobile with the brand name ‘Mangal’s’. Mangal Pvt. Ltd. has organized a concert to
promote its brand. Ms. Juli, its brand ambassador, who is a leading film actress, has given a classical dance performance
in the said concert. The proceeds of the concert worth Rs. 1,20,000 will be donated to a charitable organization. Whether
Ms. Juli will be required to pay any GST?
Answer :
Services by an artist by way of a performance in folk or classical art forms of
(a) music, or
(b) dance, or
(c) theatre
are exempt from GST, if the consideration charged for such performance is not more than Rs. 1,50,000. However, such
exemption is not available in respect of service provided by such artist as a brand ambassador as per entry no. 78 of NN
12/2017 CT (R).
Since Ms. Juli is the brand ambassador of ‘Mangal’s’ mobile manufactured by Mangal Pvt. Ltd., the services rendered by
her by way of a classical dance performance in the concert organized by Mangal Pvt. Ltd. to promote its brand will not
be eligible for the above mentioned exemption and thus, be liable to GST. The fact that the proceeds of the concert will
be donated to a charitable organization will not have any bearing on the eligibility or otherwise to the above mentioned
exemption.
Illustration 10 :
Compute the taxable value of supply of service of Basanti Ltd. for the month of July 20XX from the following
information.

[Link]. Particulars Amount (Rs.)

(1) Entry fees received for cultural programme organised in open Theatre assuming each tickets
are Rs. 500 1,00,000
(2) Receipts on account of stand alone ride in a mall 3,00,000
(3) Receipts of video parlours exhibiting movies 2,00,000
(4) Auxiliary services provided in capacity of an event manager for organising an event 12,00,000
(5) Receipts from running Circus assuming each tickets are Rs. 400 16,00,000
(6) Receipts on account of admission to award function where the consideration for admission is
Rs. 600 per person 12,00,000
(7) Receipts on account of admission to musical performance where the consideration for
admission is Rs. 1,000 per person 10,00,000
(8) Receipts on account of admission to recognised sporting event where the consideration for
admission is Rs. 1,000 per person 6,00,000
(9) Receipts on account of admission to non recognised sporting event where the consideration 35,00,000
 Exemptions Under GST 263

for admission is Rs. 1,000 per person

(10) Receipts of amusement park 10,00,000

Answer : Computation of value of taxable supply

S. No. Particulars Amount (Rs.)

(1) Entry fees received for cultural programme organised in open theatre (Note-1) Exempt
(2) Receipts on account of stand alone ride in a mall 3,00,000
(3) Receipts of video parlours exhibiting movies 2,00,000
(4) Auxiliary services provided in capacity of an event manager for organising an event 12,00,000
(5) Receipts from running Circus (Note-1) Exempt
(6) Receipts on account of admission to award function where the consideration for
admission is Rs. 600 per Person 12,00,000
(7) Receipts on account of admission to musical performance where the consideration for
admission is Rs. 1,000 per person 10,00,000
(8) Receipts on account of admission to recognised sporting event where the consideration
for admission is Rs. 1,000 per Person 6,00,000
(9) Receipts on account of admission to non recognised sporting event where the
consideration for admission is Rs. 1,000 per Person 35,00,000
(10) Receipts of amusement park 10,00,000
Taxable Value of supply 90,00,000

Note:
Services by way of right to admission to-
(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event other than a recognised sporting
event;
(c) recognised sporting event,
(d) Planetarium
where the consideration for right to admission to the events or places as referred to in (a), (b), (c) or (d) above is not
more than Rs. 500 is exempt as per entry no. 81 of NN 12/2017 CT (R).

5. Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India.
[Entry No. 54 of NN. 09/2017 IT (R)]
Note : As per clause (zzl) under this notification, ‘Tour operator’ means any person engaged in the business of
planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation,
sightseeing or other similar services) by any mode of transport, and includes any person engaged in the
business of operating tours.
6. Tour operator service, which is performed partly in India and partly outside India, supplied by a tour
operator to a foreign tourist, to the extent of the value of the tour operator service which is performed outside
India.
The value of the tour operator service performed outside India shall be such proportion of the total
consideration charged for the entire tour which is equal to the proportion which the number of days for which
the tour is performed outside India has to the total number of days comprising the tour, or 50% of the total
consideration charged for the entire tour, whichever is less.
Further, in making the above calculations, any duration of time equal to or exceeding 12 hours shall be
 264 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

considered as 1 full day and any duration of time less than 12 hours shall be taken as half a day.
Illustrations: A tour operator provides a tour operator service to a foreign tourist as follows: -
(a) 3 days in India, 2 days in Nepal; Consideration Charged for the entire tour = Rs. 1,00,000/-
Exemption: Rs. 40, 000/- (Rs. 1,00,000/- x 2/5) or, Rs. 50, 000/- (50% of Rs. 1,00,000/-), whichever is less, i.e. Rs.
40,000/- (Taxable value: Rs. 60,000/-);
(b) 2 days in India, 3 nights in Nepal; Consideration Charged for the entire tour = Rs. 1,00,000/-
Exemption: Rs. 60,000 (Rs. 1,00,000/- x 3/5) or, Rs. 50,000/- (50%of Rs. 1,00,000/-), whichever is less, i.e. Rs.
50,000/- (Taxable value: Rs. 50,000/-);
(c) 2.5 days in India, 3 days in Nepal; Consideration charged for the entire tour = Rs. 1,00,000/-
Exemption: Rs. 54,545 (Rs. 1,00,000/- x 3/5.5) or, Rs. 50,000/- (50% of Rs. 1,00,000/-), whichever is less, i.e. Rs.
50,000/- (Taxable value: Rs. 50,000/-).
[Entry No. 52A of NN. 09/2017 CT (R), inserted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
7. Services provided to a recognised sports body by -
(a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event
organised by a recognized sports body;
(b) another recognised sports body.
[Entry No. 68 of NN. 12/2017 CT (R)]
Note : As per clause (zw) under this notification, ‘Recognised sports body’ means –
(i) Indian Olympic Association;
(ii) Sports Authority of India;
(iii) A national sports federation recognised by the Ministry of Sports and Youth Affairs of the Central
Government, and its affiliate federations;
(iv) National sports promotion organisations recognised by the Ministry of Sports and Youth Affairs of the
Central Government;
(v) The International Olympic Association or a federation recognised by the International Olympic
Association; or
(vi) A federation or a body which regulates a sport at international level and its affiliated federations or bodies
regulating a sport in India.
Analysis :
(i) Services provided by individuals such as selectors, commentators, curators, technical experts,
cheerleaders, etc. are not exempted, hence, taxable.
(ii) The service of a player to a franchisee which is not a recognized sports body is not exempted, hence,
taxable.

Illustration 11 :

Mr. Agrawal acts as a referee in a Tennis match organized by Sports Authority of India. He has also acted as a referee in
another charity tennis match organized by a local sports club. Discuss whether he is required to pay any GST?
Answer : Services provided to a recognized sports body by an individual as a referee in a sporting event organized by a
recognized sports body is exempt from GST as per entry no. 68(a) of NN 12/2017 CT (R).
Since in the first case, the Tennis match is organized by Sports Authority of India, which is a recognized sports body,
services provided by the individual as a referee in such tennis match will be exempt.
However, when he acts as a referee in a charity tennis match organized by a local sports club, he would not be entitled
to aforementioned exemption as a local sports club is not a recognized sports body and thus, GST will be payable in this
case.
 Exemptions Under GST 265

Illustration 12 : Mr. AB a famous cricketer furnishes you with the following information of the various receipts for the
month ended 30-11-2018. You are required to determine value of taxable services, if all the amounts are exclusive of
GST.

S.N. Particulars Amount (Rs.)

(1) Receipts of sports training academy registered u/s 12AB of Income Tax Act to coach young 20 lakh
players
(2) Receipts from acting as brand ambassador for corporate Client 35 lakh

(3) Receipts from franchisee of Indian Premier league (not a recognised sports body) 135 lakh

(4) Receipts from Sports Authority of India for participation in recognised sport 100 lakh

Answer : Computation of Value of Taxable Supply

S.N. Particulars Amount (Rs.)

(1) Receipts of sports training academy registered u/s 12AA of Income Tax Act to coach young Exempt
players [Exempt from GST as per Entry No. 80 of NN. 12/2017-CT (R)]
(2) Receipts from acting as brand ambassador for corporate client [Liable for GST] 35 lakh

(3) Receipts from franchisee of Indian Premier league (not a recognised sports body) [Liable for 135 lakh
GST]

(4) Receipts from Sports Authority of India for participation in recognised sport [Exempt from Exempt
GST as per Entry No. 68 of NN. 12/2017-CT (R)]
Total Value of Taxable Services 170 Lakh

8. Services by way of sponsorship of sporting events organised -

(a) by a national sports federation, or its affiliated federations, where the participating teams or individuals
represent any district, State, zone or Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All
India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.
[Entry No. 53 of NN. 12/2017 CT (R)]

9. Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries
directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020 to be hosted in
India whenvever rescheduled.
But, this exemption shall be allowed only if Director (Sports), Ministry of Youth Affairs and Sports certifies that
the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
[Entry No. 9AA of NN 12/2017 CT (R)]
10. Services by way of right to admission to the events organised under FIFA U-17 Women's World Cup 2020,
whenvever rescheduled. [Entry No. 82A of NN 12/2017 CT (R)]
Analysis: This service is exempt without any monetary limit.
11. Services provided by and to Federation Internationale de Football Association (FIFA) and its subsidiaries
directly or indirectly related to any of the events under FIFA U-17 World Cup 2017 to be hosted in India.
266 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

But, this exemption shall be allowed only if Director (Sports), Ministry of Youth Affairs and Sports certifies that
the services are directly or indirectly related to any of the events under FIFA U- 17 World Cup 2017.
[Entry No. 9A of NN. 12/2017 CT (R)]
12. Services by way of right to admission to the events organized under FIFA U-17 World Cup 2017.
[Entry No. 82 of NN. 12/2017 CT (R)]
Analysis: This service was exempt without any monetary limit.
13. Services provided by and to Asian Football Confederation (AFC) and its subsidiaries directly or indirectly
related to any of the events under AFC Women’s Asia Cup 2022 to be hosted in India.
But, this exemption shall be allowed only if Director (Sports), Ministry of Youth Affairs and Sports certifies that
the services are directly or indirectly related to any of the events under AFC Women’s Asia Cup 2022.
[Entry No. 9AB of NN. 12/2017 CT (R)]
14. Services by way of right to admission to the events organized under AFC Women’s Asia Cup 2022.
[Entry No. 82B of NN. 12/2017 CT (R)]
Analysis: This service is exempt without any monetary limit.

Transportation Related Services

1. Service of transportation of passengers, with or without accompanied belongings, by -

(a) railways in a class other than -
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places located in India;
and
(e) metered cabs or auto rickshaws (including e-rickshaws) [Provided that nothing contained in item (e) shall
apply to services supplied through an electronic commerce operator, and notified u/s 9(5) of the CGST Act,
2017] [Proviso inserted by NN 16/2021 – CT(R) w.e.f. 01.01.2022]
[Entry No. 17 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (za) under this notification, ‘E-rickshaw’ means a special purpose battery powered vehicle of
power not exceeding 4000 watts, having three wheels for carrying goods or passengers, as the case may be,
for hire or reward, manufactured, constructed or adapted, equipped and maintained in accordance with
such specifications, as may be prescribed in this behalf.
(2) As per clause (zi) under this notification, ‘Inland waterway’ means national waterways as defined in clause
(h) of section 2 of the Inland Waterways Authority of India Act, 1985 or other waterway on any inland
water, as defined in clause (b) of section 2 of the Inland Vessels Act, 1917.
(3) As per clause (zo) under this notification, ‘Metered cab’ means any contract carriage on which an automatic
device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted
which indicates reading of the fare chargeable at any moment and that is charged accordingly under the
conditions of its permit issued under the Motor Vehicles Act, 1988 and the rules made thereunder (but does
not include radio taxi).
Analysis:
(1) If any separate amount is charged for transportation of accompanied belongings also, then, applicability of
provisions of GST on such charges will be the same which are applicable for the charges for the
 Exemptions Under GST 267

transportation of passenger who is carrying accompanied belongings. [i.e. if GST is exempt on

transportation of passenger, then, GST would be exempt on transportation of accompanied belongings also
and vice versa.]
(2) GST will not be leviable on transportation of passengers in Second or lower class or sleeper class or non AC
coaches in trains as per the negative list.
(3) Service provided by leisure or charter vessels or a cruise ship, predominant purpose of which is tourism,
would not be exempt from GST and hence, taxable.
(4) Transport of passengers by Air is not covered in the above entry of exemption list, hence, taxable.
(5) Example: Services by way of transportation of passengers [not predominantly for tourism purpose] on a
vessel, from Kolkata to Port Blair (mainland to island) or Port Blair to Rose Island (inter island) is covered in
item (d) of Entry 17 since such transportation is between two places located in India.
(6) Transport of passengers by metered cabs or auto rickshaws (including e-rickshaws) shall be taxable, if
transportation services are supplied through an electronic commerce operator, and notitied u/s 9(5) of
CGST Act, 2017. [Proviso inserted by NN 16/2021 – CT(R) w.e.f. 01.01.2022]
(7) Clarification on Applicability of GST on tickets of private ferry used for passenger transportation
[Circular No. 177/09/2022 – GST, dated 03.08.2022]
 These private ferries are used as means of transport from one island to another in Andaman and Nicobar
Islands.
 As per clause (d) of above entry no. 17, “transportation of passengers by public transport, other than
predominantly for tourism purpose, in a vessel between places located in India” is exempted.
 It is clarified that this exemption would apply to tickets purchased for transportation from one point to
another irrespective of whether the ferry is owned or operated by a private sector enterprise or by a
PSU/government.
 It is further clarified that, the expression ‘public transport’ used in the exemption notification only means
that the transport should be open to public. It can be privately or publicly owned. Only exclusion is on
transportation which is predominantly for tourism, such as services which may combine with
transportation, sightseeing, food and beverages, music, accommodation such as in shikara, cruise, etc.

2. Transport of passengers, with or without accompanied belongings, by –

(a) Air in economy class, embarking from or terminating in an airport located in the state of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in
West Bengal; [Words “in economy class” inserted by NN 04/2022 – CT (R), w.e.f. 18.07.2022]
(b) non-air conditioned contract carriage other than radio taxi, for transportation of passengers, excluding
tourism, conducted tour, charter or hire; or
(c) stage carriage other than air- conditioned stage carriage.
Provided that nothing contained in items (b) and (c) above shall apply to services supplied through an electronic
commerce operator, and notitied u/s 9(5) of CGST Act, 2017. [Proviso inserted by NN 16/2021 – CT(R) w.e.f.
01.01.2022]
[Entry No. 15 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (zzh) under this notification, ‘Stage carriage’ shall have the same meaning as assigned to it in
clause (40) of section 2 of the Motor Vehicles Act, 1988.
(2) As per Sec. 2(40) of the Motor Vehicle Act, 1988, “Stage carriage” means a motor vehicle constructed or
adapted to carry more than 6 passengers excluding the driver on hire or reward at separate fares paid by or
for individual passengers, either for the whole journey or for stages of the journey.
(3) As per clause (t) under this notification, ‘Contract carriage’ has the same meaning as assigned to it in clause
(7) of section 2 of the Motor Vehicles Act, 1988.
(4) As per clause (zu) under this notification, ‘Radio taxi’ means a taxi including a radio cab, by whatever name
 268 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

called, which is in two-way radio communication with a central control office and is enabled for tracking
using the Global Positioning System or General Packet Radio Service;
Analysis :
(1) No GST is payable for the service rendered by a non-A.C. bus with a contract carriage permit. However,
transport of passengers in any contract carriage whether A.C. or non-A.C. for the transportation for tourism,
conducted tour, charter or hire is taxable.
(2) However, transport of passengers by a radio taxi is not exempted, whether A.C. or non-A.C., hence, taxable.
(3) Transport of passengers by A.C. contract carriage is also not exempted, hence, taxable.
(4) Transport of passengers in Non-A.C. stage carriage is exempted under this entry.
(5) But, Transport of passengers by A.C. stage carriage is not exempted, hence, taxable.
(6) Transport of passengers by ropeway, cable car or aerial tramway is not exempted under any exemption
entry, hence, it is taxable.
(7) Transport of passengers by modes covered under items (b) and (c) of this entry shall be taxable, if
transportation services are supplied through an electronic commerce operator, and notitied u/s 9(5) of
CGST Act, 2017. [Proviso inserted by NN 16/2021 – CT(R) w.e.f. 01.01.2022]
(8) W.e.f. 18.07.2022, transport of passengers by Air, embarking from or terminating in an airport located in the
state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at
Bagdogra located in West Bengal is made taxable if transporation is done in any class other than economy
class. [As amended by NN 04/2022 – CT (R), w.e.f. 18.07.2022]
(9) Clarification on whether hiring of Non-A.C. Contract Carriages by firms for transportation of their
employees to and from work is exempt under clause (d) of above entry no. 17 i.e. Transport of passengers by
non-a.c. contract carriage [Circular No. 177/09/2022 – GST, dated 03.08.2022]
 As per clause (b) of above entry no. 15, “transport of passengers, with or without accompanied
belongings, by non-a.c. contract carriage, other than radio taxi, for transport of passengers, excluding
tourism, conducted tour, charter or hire” is exempted.
 It is clarified that ‘charter or hire’ excluded from the above exemption entry is charter or hire of a motor
vehicle for a period of time, where the renter (i.e. service recipient) defines how and when the vehicles
will be operated, determining schedules, routes and other operational considerations.
 In other words, the said exemption would apply to passenger transportation services by non-air
conditioned contract carriages where according to explanatory notes, transportation takes place over pre-
determined route on a pre-determined schedule. The exemption shall not be applicable where contract
carriage is hired for a period of time, during which the contract carriage is at the disposal of the service
recipient and the recipient is thus free to decide the manner of usage (route and schedule) subject to
conditions of agreement entered into with the service provider.

Illustration 13 : Blue Bus Ltd. is engaged in providing service of transportation of passengers by following modes in
the month of June 20XX.

S.N. Particulars Amount (Rs.)

1) Service of transportation of passenger by non air conditioned Stage carriage 50,00,000
2) Service of transportation of passengers in air conditioned contract carriages 45,00,000
3) Service of transportation of passengers by vessels in National Waterways 15,00,000
4) Service of transportation of passengers in Radio Taxis 30,00,000
5) Service of transportation of passengers in Non air conditioned contract carriages 5,00,000
6) Service of transportation of passenger in Metered Cab 30,00,000
7) Service of transportation of passengers by contract carriage for Tourism 25,00,000
 Exemptions Under GST 269

8) Service of transportation of passenger for Mumbai to Chennai port in a vessel and such 25,00,000
service is not for tourism purpose
9) Service of transportation of passenger by Air conditioned Stage Carriage 5,00,000

Compute the value of taxable supply if all charges are exclusive of GST.
Answer : Computation of Value of taxable supply

S.N. Particulars Amount (Rs.)

1) Transportation of passenger by non air conditioned Stage carriage [Exempt from GST as per Nil
Entry No. 15 of NN. 12/2017-CT (R)]
2) Service of transportation of passengers in air-conditioned contract carriages [Liable to GST] 45,00,000
3) Transportation of passengers by National Waterways [Since National Waterways are covered in Nil
definition of inland Waterways - Exempt from GST as per Entry No. 17 of NN. 12/2017-CT (R)]
4) Service of transportation of passengers in Radio Taxis [Liable to GST] 30,00,000
5) Service of transportation of passengers in non air-conditioned contract carriages [Exempt from Nil
GST as per Entry No. 15 of NN. 12/2017-CT (R)]
6) Transportation of passenger in Metered Cab [Exempt from GST as per Entry No. 17 of NN. Nil
12/2017-CT (R)]
7) Transportation of passengers by contract carriage for tourism [Liable to GST] 25,00,000
8) Transportation of passenger from Mumbai to Chennai port in a vessel [Being a public transport Nil
in a vessel sailing in India and not for tourism Exempt from GST as per Entry No. 17 of NN.
12/2017-CT (R)]
9) Transportation of passenger by Air conditioned Stage Carriage [Liable to GST] 5,00,000
Total Value of Taxable Services 1,05,00,000

3. Services provided to the Central Government, by way of transport of passengers with or without
accompanied belongings, by air, embarking from or terminating at a Regional Connectivity Scheme airport,
against consideration in the form of viability gap funding.
However, the said exemption shall not apply on or after the expiry of a period of 3 years from the date of
commencement of operations of the regional connectivity scheme airport as notified by the Ministry of Civil
Aviation. [Entry No. 16 of NN. 12/2017 CT (R)]

4. Services by way of transportation of goods-

(a) by road except the services of –
(i) a goods transportation agency (GTA);
(ii) a courier agency;
(b) by inland waterways.
[Entry No. 18 of NN. 12/2017 CT (R)]
Notes:
(1) As per clause (ze) under this notification, ‘Goods transport agency’ means any person who provides
service in relation to transport of goods by road and issues consignment note, by whatever name called.
(2) As per clause (u) under this notification, ‘Courier agency’ means any person engaged in the door-to-door
transportation of time-sensitive documents, goods or articles utilising the services of a person, either
directly or indirectly, to carry or accompany such documents, goods or articles;
Analysis:
(1) All the services provided by GTA issuing consignment note are excluded from the exemption list and
270 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

hence, taxable.
 Thus, it can be seen that issuance of a consignment note is the sine-qua-non for a supplier of service to
be considered as a GTA. If such a consignment note is not issued by the transporter, the service
provider will not come within the ambit of GTA.
 If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the
transporter) and the transporter becomes responsible for the goods till its safe delivery to the consignee.
It is only the services of such GTA, which assumes agency functions, that has been brought into the GST
net.
 Individual truck/tempo operators who do not issue any consignment note are not covered within the
meaning of the term GTA. As a result, the services provided by such individual transporters who do
not issue a consignment note will be covered by the entry 18 of Notification, which are exempt from
GST.
(2) All the services provided by courier agency are excluded from the exemption list and hence, taxable. The
nature of service provided by ‘Express Cargo Service’ falls within the scope and definition of the courier
agency. Similarly, ‘Angadia’ who undertakes delivery of documents, goods or articles received from a
customer to another person for a consideration is also covered within the scope and definition of the
courier agency and hence, liable to GST.
(3) The services of transportation of goods by railways and by air within the country or abroad are not
covered in the exemption list and hence, taxable.
(4) The services of transportation of goods by a vessel other than in inland waters or national waterways i.e.
in the coastal waters of India, are not covered in the exemption list and hence, taxable.
(5) The services provided as agents for inland waterways are not covered by exemption list and hence,
taxable.
(6) Clarification on Taxability of transport of minerals within a mining area, say from mining pit head to
railway siding, beneficiation plant etc., by vehicles deployed with driver for a specific duration of time
and whether the same would be covered under Entry No. 18 of NN. 12/2017 - CT (R) which exempts
transport of goods by road except by a GTA [Circular No. 177/09/2022 – GST, dated 03.08.2022]
 Usually in such cases the vehicles such as tippers, dumpers, loader, trucks etc., are given on hire to the
mining lease operator. Expenses for fuel are generally borne by the recipient of service. The vehicles
with driver are at the disposal of the mining lease operator for transport of minerals within the mine
area (mining pit to railway siding, beneficiation plant etc.) as per his requirement during the period of
contract.
 Such services are nothing but “rental services of transport vehicles with operator”. The person who
takes the vehicle on rent defines how and when the vehicles will be operated, determines schedules,
routes and other operational considerations. The person who gives the vehicles on rent with operator
can not be said to be supplying the service by way of transport of goods.
 Accordingly, as recommended by the GST Council, it is clarified that such renting of trucks and other
freight vehicles with driver for a period of time is a service of renting of transport vehicles with
operator and not service of transportation of goods by road and hence, it is not eligible for exemption
under Entry No. 18 of NN. 12/2017 - CT (R) (i.e. transport of goods by road except by a GTA).

5. Services by way of transportation of goods by an aircraft from a place outside India upto the customs station
of clearance in India. [Entry No. 19 of NN. 12/2017 CT (R)]
Analysis:
(1) Transportation of goods by an aircraft from a place outside India upto the customs station of clearance in
India is exempt from GST and not only upto first customs station in India. For example, if any aircraft
carrying goods from Singapore has arrived at Delhi Customs station, and unloaded certain goods, which
are to be transshipped to Mumbai Customs station through another aircraft. Then, in such case,
transportation upto Mumbai Customs station shall be exempt from GST, because, Mumbai customs station
is the Customs station of clearance in India.
 Exemptions Under GST 271

(2) Prior to 01.06.2016, this exemption was available to such transport by aircraft as well as vessel. But, now,
this exemption is available only in case of transport by aircraft. W.e.f. 01.06.2016, such transport by vessels
is made taxable.

6. Services by way of transportation of goods by an aircraft from customs station of clearance in India to a place
outside India.
Nothing contained in this entry shall apply after the 30.09.2018 30.09.2019 30.09.2020 30.09.2021 30.09.2022.
[Exemption extended till 30.09.2022 by NN 07/2021 - CT (R) w.e.f. 01.10.2021]
[Entry No. 19A of NN 12/2017 CT (R)]
Analysis: W.e.f. 01.10.2022, this service is made taxable, because, this exemption is not extended beyond
30.09.2022.
7. Services by way of transportation of goods by a vessel from customs station of clearance in India to a place
outside India.
Nothing contained in this entry shall apply after the 30.09.2018 30.09.2019 30.09.2020 30.09.2021 30.09.2022.
[Exemption extended till 30.09.2022 by NN 07/2021 - CT (R) w.e.f. 01.10.2021]
[Entry No. 19B of NN 12/2017 CT (R)]
Analysis: W.e.f. 01.10.2022, this service is made taxable, because, this exemption is not extended beyond
30.09.2022.
8. Satellite launch services supplied by Indian Space Research Organisation (ISRO), Antrix Corporation Limited
or New Space India Limited. [Entry No. 19C of NN 12/2017 CT (R), as amended by NN 07/2023 CT (R), w.e.f.
27.07.2023]
Analysis of Amendment: W.e.f. 27.07.2023, the exemption to Satellite launch services has been extended to all
the organisations including private organisations to encourage start-ups.
9. Services by way of transportation by rail or a vessel from one place in India to another of the following goods:
(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;
(b) defence or military equipments;
(c) newspaper or magazines registered with the Registrar of Newspapers;
(d) railway equipments or materials; [Omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
(e) agricultural produce;
(f) milk, salt and food grain including flours, pulses and rice; or
(g) organic manure.
[Entry No. 20 of NN. 12/2017 CT (R)]
10. Services provided by a goods transport agency, by way of transport in a goods carriage of –
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a
single carriage does not exceed Rs. 1,500; [Omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not
exceed Rs. 750; [Omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipments.
[Entry No. 21 of NN. 12/2017 CT (R)]
Illustration 14 : (GTA Service)
Calculate the value of taxable service of ‘X’ Transport Company engaged in the business of transport of goods
by road. Give reasons for taxability or exemption of each item. Freight is received from persons registered in
GST. Suitable assumptions may be made wherever required. Rate of GST = 12%.
272 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

S.N. Particulars Amount (Rs.)

1 Total freight charges received by ‘X’ during the year 13,50,000

2 Freight charges received for transporting fruits 1,25,000

3 Freight collected for transporting small consignment for persons who paid less than
Rs. 750/- for all consignments 75,000

4 Freight collected for transporting goods in small vehicles for persons who paid less
than Rs. 1,500/- per trip per vehicle 1,50,000
Answer: Computation of Value of Taxable Service and GST thereon

Particulars Amount (Rs.)

Total freight received 13,50,000

Less : Freight charges received for transporting fruits [Exempted vide Entry No. 21 of NN. 1,25,000
12/2017 CT (R)]

Less : Freight collected less than Rs. 750 from each consignee (Taxable) [Exemption NIL
withdrawn by NN. 04/2022 CT (R), we.f. 18.07.2022]

Less : Freight collected for transporting goods in small vehicles for persons who paid less NIL
than Rs. 1,500/- per trip per vehicle (Taxable) [Exemption withdrawn by NN. 04/2022 CT
(R), we.f. 18.07.2022]

Total Value of Taxable Service 12,25,000

GST @ 12% 1,47,000
Illustration 15 : (GTA Service)
Discuss whether GST is chargeable in respect of goods transport agency service in each of the following
independent cases :
(i) Transportation of organic manures - Rs. 50,000.
(ii) Transportation of goods by a single goods carriage - Rs. 1,800.
(iii) Transportation of military equipments - Rs. 25,000.
(iv) Transportation of polyester fibre - Rs. 15,000.
Necessary explanation is also to be given.
Answer :
Entry No. 21 of Mega exemption notification no. 12/2017 CT (R) exempts goods transport agency service in
respect of certain goods.

S.N. Particulars Taxability

(i) Transportation of organic manures - Rs. 50,000 [Entry 21(e)] Exempt

(ii) Transportation of goods by a single goods carriage - Rs. 1,800 Taxable

(iii) Transportation of military equipments - Rs. 25,000 [Entry 21(h)] Exempt

(iv) Transportation of polyester fibre - Rs. 15,000 Taxable

11. Services provided by a Goods Transport Agency (GTA), to an unregistered person, including an unregistered
casual taxable person, other than the following recipients, namely :
(a) any factory registered under or governed by the Factories Act, 1948; or
(b) any society registered under the Societies Registration Act, 1860 or under any other law for the time being
in force in any part of India; or
 Exemptions Under GST 273

(c) any co-operative society established by or under any law for the time being in force; or
(d) any body corporate established, by or under any law for the time being in force; or
(e) any partnership firm whether registered or not under any law including association of persons; and
(f) any casual taxable person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST
Act.
[Entry No. 21A of NN. 12/2017 CT (R)]
Analysis :

(1) Any service provided by GTA to persons covered under aforesaid clauses (a) to (f) and to any registered
person in GST, are chargeable to GST. Otherwise, it is exempt from GST.
(2) If GST on GTA service is chargeable and if GTA is registered under GST, then, GTA has the choice to opt
to pay GST under Forward Charge Mechanism by making a required declaration on the tax invoice issued
by it.
(3) Further, if GTA opts to pay GST under Forward Charge Mechanism, then, GTA has the choice to pay GST
either at 5% (without any ITC on Inputs, Capital Goods & Input Services used by GTA) or 12% (with ITC
on Inputs, Capital Goods & Input Services used by GTA).
(4) Further, if GST on GTA service is chargeable and if GTA does not opt to pay GST under Forward Charge
Mechanism, then, recipient will be liable to pay GST under Reverse Charge Mechanism and applicable rate
of GST will be 5% in this case.

12. Services provided by a goods transport agency, by way of transport of goods in a goods carriage, to, -
(a) a Department or Establishment of the Central Government or State Government or Union territory; or
(b) local authority; or
(c) Governmental agencies,
which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax (TDS) u/s 51 and
not for making a taxable supply of goods or services. [Entry No. 21B of NN. 12/2017 CT (R)]

13. Supply of services associated with transit cargo to Nepal & Bhutan (landlocked countries). [Entry No. 9B of
NN. 12/2017 CT (R)]
Analysis: Transportation Services by any mode, Transit Insurance, Cargo Handling Services, etc. are covered
here.
Clarification on applicability of GST on transportation of empty containers returning to India, from Nepal
and Bhutan after delivery of transit cargo [Circular No. 177/09/2022 – GST, dated 03.08.2022]
 The opening sentence of the Agenda Item 7(ix) placed before the GST Council on the issue of this
exemption, makes it clear that the proposal was to exempt supply of services associated with transit cargo
both to and from Nepal and Bhutan.
 Accordingly, as recommended by the GST Council, it is clarified that exemption under Sl. No. 9B of NN.
12/2017 - CT (R) covers services associated with transit cargo both to and from Nepal and Bhutan.
 It is also clarified that movement of empty containers from Nepal and Bhutan, after delivery of goods
there, is a service associated with the transit cargo to Nepal and Bhutan. Further, as per the regulations
framed for transhipment of cargo to Nepal and Bhutan, it is verifiable that the empty container returning
from Nepal or Bhutan is the same container which was used to deliver goods to Nepal or Bhutan.
Therefore, return of empty containers is also covered by this exemption.

14. Services by way of giving on hire –

(a) to a state transport undertaking, a motor vehicle meant to carry more than 12 passengers; or
(aa) to a local authority, an Electrically operated vehicle meant to carry more than 12 passengers
[Explanation.- For the purposes of this entry, “Electrically operated vehicle” means vehicle falling under
Chapter 87 in the First Schedule to the Customs Tariff Act, 1975 which is run solely on electrical energy
274 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

derived from an external source or from one or more electrical batteries fitted to such road vehicle.]; or
(b) to a goods transport agency, a means of transportation of goods; or
(c) motor vehicle for transport of students, faculty and staff, to a person providing services of
transportation of students, faculty and staff to an educational institution providing services by way of
pre-school education and education upto higher secondary school or equivalent.
[Entry No. 22 of NN. 12/2017 CT (R)]
Examples:
(i) If a bus is given on hire to a state transport undertaking, then, GST is exempted on the hire charges.
(ii) Similarly, if a truck is given on hire to a GTA, then, GST is exempted on the hire charges.
Renting of vehicles to State Transport Undertakings and Local Authorities [Circular No. 164/20/2021 – GST,
dated 06.10.2021]
1. Representations have been received seeking clarification regarding eligibility of the service of renting of
vehicles to State Transport Undertakings (STUs) and Local Authorities for exemption from GST under NN
12/2017 - CT (R). Sl. No. 22 of this notification exempts “services by way of giving on hire (a) to a state
transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (aa) to a local
authority, an Electrically Operate vehicle meant to carry more than twelve passengers”.
2. This issue has arisen in the wake of ruling issued by an Authority for Advance Ruling that the entry at Sl.
No. 22 of NN 12/2017 - CT (R) exempts services by way of giving on hire vehicles to a State Transport
Undertaking or a local authority and not renting of vehicles to them. The ruling referred to certain case laws
pertaining to erstwhile positive list based service tax regime.
3. It is relevant to note in this context that Schedule II of CGST Act, 2017 declares supply of any goods without
transfer of title as supply of service even if right to use is transferred. Transfer of right to use has been
declared as a supply of service [Schedule II, Entry 5(f) refers]
4. As recommended by the GST Council, it is clarified that the expression “giving on hire” in Sl. No. 22 of the
NN 12/2017 - CT (R) includes renting of vehicles. Accordingly, services where the said vehicles are rented
or given on hire to State Transport Undertakings or Local Authorities are eligible for the said exemption
irrespective of whether such vehicles are run on routes, timings as decided by the State Transport
Undertakings or Local Authorities and under effective control of State Transport Undertakings or Local
Authorities which determines the rules of operation or plying of vehicles.

15. Service by way of access to a road or a bridge on payment of toll charges. [Entry No. 23 of NN. 12/2017 CT (R)]
Clarification regarding applicability of GST on overloading charges collected at Toll Plazas [Circular No.
164/20/2021 – GST, dated 06.10.2021]
1. Vide notification dated 25.09.2018, issued by Ministry of Road Transport And Highways, overloaded
vehicles were allowed to ply on the national highways after payment of fees with multiplying factor of
2/4/6/8/10 times the base rate of toll. Therefore, overloading fees are effectively higher toll charges.
2. As recommended by the GST Council, it is clarified that overloading charges at toll plazas would get the
same treatment as given to toll charges and hence, will be exempt from GST.
Clarification regarding applicability of GST on additional toll fees collected in the form of higher toll
charges from vehicles not having fastag [Circular No. 177/09/2022 – GST, dated 03.08.2022]
 Ministry of Road Transport & Highways (MORTH) vide circular dated 16.02.2021 has directed to collect
additional amount from the users of the road to the extent of two times of the fees applicable to that
category of vehicle which is not having a valid functional Fastag.
 Essentially, the additional amount collected from the users of the road not having a functional Fastag, is in
the nature of Toll Charges and should be treated as additional toll charges.
 Circular no. 164/20/2021 – GST, dated 06.10.2021, has already clarified that overloading charges at toll
plazas would get the same treatment as given to toll charges.
 Therefore, it is clarified that additional fee collected in the form of higher toll charges from vehicles not
 Exemptions Under GST 275

having Fastag is essentially payment of toll for allowing access to roads or bridges to such vehicles and may
be given the same treatment as given to toll charges and hence, will be exempt from GST.

16. Service by way of access to a road or a bridge on payment of annuity. [Entry No. 23A of NN. 12/2017 - CT (R),
Omitted by NN 15/2022 – CT (R), w.e.f. 01.01.2023]

17. Services by way of granting National Permit to a goods carriage to operate through-out India/contiguous
States. [Entry No. 61A of NN. 12/2017 CT (R)]

Construction Related Services

1. Services by way of pure labour contracts of construction, erection, commissioning, or installation of original
works pertaining to a single residential unit otherwise than as a part of a residential complex.
[Entry No. 11 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (zza) under this notification, ‘Residential complex’ means any complex comprising of a
building or buildings, having more than one single residential unit;
(2) As per clause (zzd) under this notification, ‘Single residential unit’ means a self-contained residential unit
which is designed for use, wholly or principally, for residential purposes for one family.
(3) As per clause (zr) under this notification, ‘Original works’ means -
 all new constructions;
 all types of additions and alterations to abandoned or damaged structures on land that are required
to make them workable;
 erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-
fabricated or otherwise.

2. Services provided by way of pure labour contracts of construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original
works pertaining to the beneficiary led individual house construction or enhancement under the Housing for
All (Urban) Mission or Pradhan Mantri Awas Yojana. [Entry No. 10 of NN. 12/2017 CT (R)]

3. Service by way of Transfer of Development Rights (TDR) or Floor Space Index (FSI) (including additional
FSI) for construction of residential apartments by a promoter in a project, intended for sale to a buyer, wholly
or partly, except where the entire consideration has been received after issuance of completion certificate,
where required, by the competent authority or after its first occupation, whichever is earlier.
The amount of GST exemption available for construction of residential apartments in the project under this
notification shall be calculated as under:
[GST payable on TDR or FSI (including additional FSI) or both for construction of the project] x (carpet area of
the residential apartments in the project) ÷ (Total carpet area of the residential and commercial apartments in
the project).
Conditions:
(i) Provided that the promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on such
proportion of value of development rights, or FSI (including additional FSI), or both, as is attributable to
the residential apartments, which remain un-booked on the date of issuance of completion certificate, or
first occupation of the project, as the case may be, in the following manner:
[GST payable on TDR or FSI (including additional FSI) or both for construction of the residential
apartments in the project but for the exemption contained herein] x (carpet area of the residential
apartments in the project which remain un- booked on the date of issuance of completion certificate or first
occupation) ÷ (Total carpet area of the residential apartments in the project)
(ii) The tax payable in terms of the first proviso hereinabove shall not exceed 1% [0.5% CGST + 0.5% SGST] of
the value in case of affordable residential apartments and 5% [2.5% CGST + 2.5% SGST] of the value in
276 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

case of residential apartments other than affordable residential apartments remaining un-booked on the
date of issuance of completion certificate or first occupation, whichever is earlier.
(iii) The promoter shall pay GST on the said portion of the development rights or FSI, or both, calculated as
above, in a tax period not later than the tax period in which the date of issuance of completion certificate or
the date of its first occupation, whichever is earlier, falls. [Entry No. 41A of NN. 12/2017 CT (R)]

4. Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in
respect of service by way of granting of long term lease, of thirty years or more, for construction of
residential apartments by a promoter in a project, intended for sale to a buyer, wholly or partly, except where
the entire consideration has been received after issuance of completion certificate, where required, by the
competent authority or after its first occupation, whichever is earlier.
The amount of GST exemption available for construction of residential apartments in the project under this
notification shall be calculated as under:
[GST payable on upfront amount (called as premium, salami, cost, price, development charges or by any other
name) payable for long term lease of land for construction of the project] x (carpet area of the residential
apartments in the project) ÷ (Total carpet area of the residential and commercial apartments in the project).
Conditions:
(i) The promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on such proportion
of upfront amount (called as premium, salami, cost, price, development charges or by any other name)
paid for long term lease of land, as is attributable to the residential apartments, which remain un- booked
on the date of issuance of completion certificate, or first occupation of the project, as the case may be, in the
following manner –
[GST payable on upfront amount (called as premium, salami, cost, price, development charges or by any
other name) payable for long term lease of land for construction of the residential apartments in the project
but for the exemption contained herein] x (carpet area of the residential apartments in the project which
remain un- booked on the date of issuance of completion certificate or first occupation) ÷ (Total carpet area
of the residential apartments in the project)
(ii) The tax payable in terms of the first proviso shall not exceed 1% [0.5% CGST + 0.5% SGST] of the value in
case of affordable residential apartments and 5% [2.5% CGST + 2.5% SGST] of the value in case of
residential apartments other than affordable residential apartments remaining un- booked on the date of
issuance of completion certificate or first occupation.
(iii) The promoter shall pay GST on the said portion of the upfront amount (called as premium, salami, cost,
price, development charges or by any other name) paid for long term lease of land, calculated as above, in
a tax period not later than the tax period in which the date of issuance of completion certificate or the date
of its first occupation, whichever is earlier, falls. [Entry No. 41B of NN. 12/2017 CT (R)]
Conclusion [Common for Entry 41A and 41B]:
Supply of Transfer of Development Rights (TDR) or Floor Space Index (FSI) (including additional FSI), Long
Term Lease (premium) of land by a landowner to a developer are exempted subject to the condition that the
constructed flats are sold before issuance of completion certificate and tax is paid on them.
Exemption of Transfer of Development Rights (TDR) or Floor Space Index (FSI) (including additional FSI)
Long Term Lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate. But, in
this case, GST is payable only @ 1% of value in case of affordable houses and 5% of value in case of other than
affordable houses.
Notes [Common for Entry 41A and 41B]:
(a) Value of supply of service by way of transfer of development rights or FSI by a person to the promoter
against consideration in the form of residential or commercial apartments shall be deemed to be equal to
the value of similar apartments charged by the promoter from the independent buyers nearest to the date
on which such development rights or FSI is transferred to the promoter.
(b) Value of portion of residential or commercial apartments remaining un-booked on the date of issuance of
completion certificate or first occupation, as the case may be, shall be deemed to be equal to the value of
 Exemptions Under GST 277

similar apartments charged by the promoter nearest to the date of issuance of completion certificate or first
occupation, as the case may be.

Renting of Immovable Property Related Services

1. Services by way of renting of residential dwelling for use as residence except where the residential dwelling
is rented to a registered person. [as amended by NN 04/2022 – CT (R), w.e.f. 18.07.2022]
Explanation. - For the purpose of exemption under this entry, this entry shall cover services by way of renting
of residential dwelling to a registered person where, –
1. the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his
personal capacity for use as his own residence; and
2. such renting is on his own account and not that of the proprietorship concern.
[Explanation inserted by NN 15/2022 – CT (R), w.e.f. 01.01.2023]
[Entry No. 12 of NN. 12/2017 CT (R)]
Analysis :
(1) W.e.f. 18.07.2022, if the residential dwelling (house/flat) is taken on rent by a GST registered person
(claiming as an expense in his books of accounts), then, it will be chargeable to GST, irrespective of its use.
Further, in this case, GST is payable by the recipient (i.e. registered person) under Reverse Charge
Mechanism irrespective of the supplier of the service.
(2) A residential dwelling given on rent which is used for commercial or non-residential use would not be
covered in this entry irrespective of recipient of service and hence, would be taxable.
(3) A residential dwelling given on rent to a person, other than registered person, which is used only for
residential purpose is covered in this entry and hence, exempt from GST.
(4) Renting of a residential dwelling to a person, other than registered person, which is used partly for
residence and partly for non-residential purpose like an office of a lawyer or a clinic of a doctor in a rented
house would be a case of bundled services as renting service is being provided both for residential use and
for non-residential use. Taxability of such bundled services has to be determined in terms of the principles
laid down in Sec. 8 of the Act. And, since, this is not naturally bundled service, therefore, it is a case of
mixed supply and hence, entire rent would be chargeable to GST. And, if residential dwelling is rented to
registered person, then, anyways it is chargeable to GST, irrespective of its use (that too under RCM).
(5) If a house is given on rent and the same is used as a hotel or a lodge, such renting transaction is not
covered in this exemption entry because the person taking it on rent is using it for commercial purpose.
Renting of rooms in a hotel or a lodge let out whether or not for temporary stay would not be covered in
this exemption entry because a hotel or a lodge is not a residential dwelling, hence, it is chargeable to GST.
(6) Govt. department allotting owned houses to its employees for residential purpose and charging a license
fee for such service would also be covered under this exemption entry and hence, not taxable.
(7) Furnished flats (service apartments) given on rent for temporary stay are in the nature of lodges or guest
houses and hence, not treatable as a residential dwelling, therefore, it will be taxable.
(8) The phrase ‘residential dwelling’ is not defined under GST. It has therefore to be interpreted in terms of
the normal trade parlance as per which it is any residential accommodation, but does not include hotel,
motel, inn, guest house, campsite, lodge, house boat, or like places meant for temporary stay.
(9) Tabular Presentation for easy understandability:
278 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

Renting of Residential Dwelling

If Recipient is Registered Person If Recipient is other than Registered Person

Commercial Use as Residence by recipient Commercial Use as Residence by recipient

Use itself (if claiming as an expense in Use itself (whether or not claiming as
the books of accounts) or for its an expense in the books of
Employee, Director, etc. accounts) or for its Employee,
Director, etc.

Taxable Taxable Taxable

RCM RCM FCM Exempt

applicable applicable applicable

2. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging
purposes, having Value of supply of a unit of accommodation below or equal to Rs. 1,000 per day or equivalent.
[Entry No. 14 of NN. 12/2017 CT (R), omitted by NN. 04/2022 – CT (R), w.e.f. 18.07.2022]
Analysis :
(1) W.e.f. 18.07.2022, Services by a hotel, inn, guest house, club or campsite, by whatever name called
(including Hostel, Dharmshala, Ashram, etc.), for residential or lodging purposes are made taxable,
irrespective of the value of supply per day per room.
(2) However, services by way of renting of rooms located within the precincts of a religious place are still
exempt from GST, if room rent is below Rs. 1,000 per day per room (Discussed in next entry).

3. Services by a person by way of -

(a) conduct of any religious ceremony;
(b) renting of precincts of a religious place meant for general public, owned or managed by an entity
registered as a charitable or religious trust under section 12AA or 12AB of the Income-tax Act, 1961 or a
trust or an institution registered under section 10(23C)(v) of the Income-tax Act or a body or an authority
covered under section 10(23BBA) of the said Income-tax Act.
Provided that nothing contained in entry (b) of this exemption shall apply to -
(i) renting of rooms where charges are Rs. 1,000 or more per day;
(ii) renting of premises, community halls, kalyan mandapam or open area, and the like where charges are Rs.
10,000 or more per day;
(iii) renting of shops or other spaces for business or commerce where charges are Rs. 10,000 or more per
month.
[Entry No. 13 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (zx) under this notification, ‘Religious place’ means a place which is primarily meant for
conduct of prayers or worship pertaining to a religion, meditation, or spirituality;
(2) As per clause (zc) under this notification, ‘General public’ means the body of people at large sufficiently
defined by some common quality of public or impersonal nature;
 Exemptions Under GST 279

Analysis:
(1) Religious ceremonies are life cycle rituals including special religious poojas conducted in terms of religious
texts by a person so authorized by such religious texts. Occasions like birth, marriage and death involve
elaborate religious ceremonies.
(2) The exemption of renting of precincts of a religious place is available only if the place is meant for general
public and is owned and managed by trusts, etc. covered under income tax act, as aforesaid.
(3) W.e.f. 18.07.2022, Services by a hotel, inn, guest house, club or campsite, by whatever name called
(including Dharmshala, Ashram, etc.), for residential or lodging purposes are made taxable, irrespective of
the value of supply per day per room. However, services by way of renting of rooms located within the
precincts of a religious place as aforesaid are still exempt from GST, if room rent is below Rs. 1,000 per day
per room.
(4) The CBIC has clarified that the word ‘precincts’ should be considered as all immovable property of the
religious place located within the outer boundary wall of the complex (of buildings and facilities) in which
the religious place is located, as being located in the precincts of the religious place. The immovable
property located in the immediate vicinity and surrounding of the religious place and owned by the
religious place or under the same management as the religious place, may be considered as being located
in the precincts of the religious place and the benefit of exemption under Entry No. 13 of NN. 12/2017 CT
(R) should be extended. [Circular no. 200/10/2016-S.T., dated 06.09.2016]
Illustration 16:
Mr. Mangal, a priest, charged Rs. 51,000 for services provided to Mr. Rohit D’Souza for conducting his marriage
ceremony at Church. Whether such services are liable to GST?
Answer:
Under Entry No. 13 of Exemption Notification No. 12/2017 CT (R), services by a person by way of conduct of
any religious ceremony is exempt from GST. In the given case, Mr. Mangal provided services to Mr. Rohit D’
Souza to conduct religious ceremony and hence, it is exempted from GST.
Illustration 17:
Mangal International Public School, rented its premises (ground) for marriage rituals and charged Rs. 1,50,000
for the same. Comment, whether the services provided are liable to GST or not.
Answer:
Yes; Since, premises (ground) of Mangal International School are not precincts of religious place, therefore,
these services are not covered under entry No. 13 of Exemption Notification No. 12/2017 CT (R). Hence, such
services are liable to GST.
Illustration 18:
Mangal Classes took a hall on rent for its last day revision batch in the precincts of a temple for Rs. 9,000 per
day. Comment whether the said services are liable to GST.
Answer: Under Entry No. 13 of Exemption Notification No. 12/2017 CT (R), it is not specified that renting of
precincts of a religious place should be for any particular purpose. Hence, the services received by Mangal
Classes are exempt from GST as the rent per day is below Rs. 10,000 per day.

Illustration 19:
Tirumala Tirupati Devasthanams, an entity registered as religious trust u/s 12AA/12AB of the Income-tax Act, has
furnished you the following details with respect to the activities undertaken by it. You are required to compute its value
of taxable supply from the information given below [assuming that all the rented premises are located within the
precincts of the religious place].

Particulars Amount (Rs.)

Renting of rooms where charges are Rs. 750 per day 7,50,000
Renting of rooms where charges are Rs. 1,200 per day 12,00,000
 280 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

Renting of community halls where charges are Rs. 12,500 per day 25,00,000
Renting of Kalyan mandapam where charges are Rs. 8,500 per day 8,50,000
Renting of shops for business where charges are Rs. 15,000 per month 9,45,000
Renting of shops for business where charges are Rs. 7,000 per month 6,58,000

Answer : Computation of Taxable Value of Supply

Particulars Amount (Rs.)

Renting of rooms where charges are Rs. 750 per day Nil
Renting of rooms where charges are Rs. 1,200 per day 12,00,000
Renting of community halls where charges are Rs. 12,500 per day 25,00,000
Renting of Kalyan mandapam where charges are Rs. 8,500 per day Nil
Renting of shops for business where charges are Rs. 15,000 per month 9,45,000
Renting of shops for business where charges are Rs. 7,000 per month Nil
Taxable Value of Supply 46,45,000
Note : As per Entry No. 13(b) of NN. 12/2017 CT (R) Services by a person by way of renting of precincts of a religious
place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section
12AA or 12AB of the Income-tax Act are exempt. Provided that nothing contained in entry (b) of this exemption shall
apply to,-
i. renting of rooms where charges are Rs. 1,000 or more per day;
ii. renting of premises, community halls, kalyan mandapam or open area, and the like where charges are Rs. 10,000
or more per day;
iii. renting of shops or other spaces for business or commerce where charges are Rs. 10,000 or more per month.

4. Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable
in respect of service by way of granting long term lease of 30 years, or more of industrial plots or plots for
development of infrastructure for financial business, provided by the State Government Industrial
Development Corporations or Undertakings or by any other entity having 20% or more ownership of Central
Government, State Government, Union territory directly or through an entity which is wholly owned by the
Central government, State Government or Union territory to the industrial units or the developers in any
industrial or financial business area.
Conditions:
(i) The leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial
activity in an industrial or financial business area;
(ii) The State Government concerned shall monitor and enforce the above condition as per the order issued by
the State Government in this regard;
(iii) In case of any violation or subsequent change of land use, due to any reason whatsoever, the original
lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally
liable to pay the amount of exempted GST, along with applicable interest & penalty; and
(iv) The lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or
sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to
subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the GST
was exempted on the long term lease of the plots by the original lessor to the original lessee subject to
above condition and that the parties to the said agreements undertake to comply with the same.
[Entry No. 41 of NN. 12/2017 CT (R)]
 Exemptions Under GST 281

Analysis:
(i) [Circular No. 101/20/2019 – GST, dated 30.04.2019]: This exemption is admissible irrespective of whether
such upfront amount is payable or paid in one or more instalments, provided the amount is determined
upfront.
(ii) Whether location charges or preferential location charges (PLC) collected in addition to the lease
premium for long term lease of land constitute part of the lease premium or of upfront amount charged
for long term lease of land and are eligible for the same tax treatment [Circular No. 177/09/2022 – GST,
dated 03.08.2022]
 Allowing choice of location of plot is integral part of supply of long-term lease of plot and therefore,
location charge is nothing but part of consideration charged for long term lease of plot. Being charged
upfront along with the upfront amount for the lease, the same is exempt.
 Accordingly, as per recommendation of the GST Council, it is clarified that location charges or
preferential location charges (PLC) paid upfront in addition to the lease premium for long term lease of
land constitute part of upfront amount charged for long term lease of land and are eligible for the same
tax treatment, and thus eligible for the above exemption.

5. Renting or leasing of agro machinery or vacant land with or without a structure incidental to its use for the
purpose of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food,
fibre, fuel, raw material or other similar products or agricultural produce. [Entry no. 54(d) of NN. 12/2017 CT
(R)]
6. Services provided by the Central Government, State Government, Union territory or local authority by way of
assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of all
life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products.
[Entry No. 63 of NN. 12/2017 CT (R)]
7. Services by way of loading, unloading, packing, storage or warehousing of agricultural produce. [Entry No.
54(e) of NN 12/2017 CT(R)]
8. Services by way of loading, unloading, packing, storage or warehousing of rice. [Entry No. 24 of NN. 12/2017
CT (R)]
Analysis: Commission agent of rice is taxable.
9. Services by way of warehousing of minor forest produce. [Entry No. 24A of NN 12/2017 C.T. (R.)]
Examples of minor forest produce: Trees and leaves, flowers and fruits, and all other parts or produce of trees,
etc. brought from the forest.
10. Services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel
leaves, tendu leaves, coffee and tea. [omitted words, omitted by NN 04/2022 – CT(R), w.e.f. 18.07.2022] [Entry
No. 24B of NN 12/2017 – CT (R)]

Illustration 20:
M/s. Maheshwari Properties registered under GST as taxable person is engaged in the business of renting various
immovable properties owned by it. During the month ending 31-08-20XX, it collected a rent of Rs. 9,00,000. The said
sum includes rent from-

S.N. Particulars Amount (Rs.)

(1) Vacant land used for agriculture 1,00,000
(2) Land used for Circus 50,000
(3) Houses let out to individuals for residential purposes 1,00,000
(4) Building let out to Hotel Vrindavan 1,20,000
(5) Vacant land given on lease to ABC Pvt. Ltd. for construction of building at a later stage to 1,80,000
 282 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

be used for furtherance of business or commerce

(6) Premises let out to a religious trust 90,000
(7) Premises let out to a Agrawal coaching classes 1,40,000
(8) Building let out to a theatre 1,20,000

Compute the taxable value of supply, assuming that the figures are exclusive of GST. Make suitable assumptions.
Answer : Computation of Taxable Value of Supply

S.N. Particulars Amount (Rs.)

Total Rent 9,00,000
(1) Rent from vacant land used for agriculture [Exempt as per Entry No. 54 of Exemption (1,00,000)
NN. 12/2017 - CT (R)
(2) Rent from land used for Circus [Liable to GST] Taxable
(3) Houses let out to individuals for residential purposes [Exempt as per Entry No. 12 of (1,00,000)
Exemption NN. 12/2017 - CT (R)]
(4) Building let out to hotel Vrindavan [Liable to GST] Taxable
(5) Vacant land given on lease to ABC Pvt. Ltd. for construction of building ata later stage to Taxable
be used for furtherance of business or commerce [Liable to GST]
(6) Premises let out to a religious trust [Liable to GST] Taxable
(7) Premises let out to a Agrawal coaching classes [Liable to GST] Taxable
(8) Building let out to a theatre [Liable to GST] Taxable
Total Taxable Value of Supply 7,00,000

Illustration 21:
Determine the taxable value of supply from the following particulars (all figures are exclusive of taxes, if any):

Particulars Amount (Rs.)

Rent of the commercial building 18,00,000
Maintenance charges collected by local society from the owner and reimbursed by the tenant 2,50,000
Owner intends to charge GST on refundable advance, as GST is applicable on advance 6,00,000
Municipal taxes paid by the owner 3,00,000

Solution :

Particulars Amount (Rs.)

Rent of the commercial buiding 18,00,000
Maintenance charges collected by the local society from the owner and reimbursed by the tenant 2,50,000
[Note-1]
Refundable advance [Note-2] Nil
Municipal taxes paid by the owner [Note-3] Nil
Total Taxable Value of supply 20,50,000
Notes:
1. Being reimbursed by the tenant, such charges ultimately form part of the rent paid by the tenant to the owner and
thus, will form part of the value.
 Exemptions Under GST 283

2. Being refundable, the advance is in the nature of security deposit which does not constitute consideration in terms
of section 2(31) of the CGST Act, 2017 and thus, is not includible in the value.
3. Being an expenditure incurred by the supplier, the same is not includible in the value, assuming that such taxes are
not charged to the recipient.

Government Related Services

1. Services by Government : Services by the Central Government, State Government, Union territory or local
authority excluding the following services –
(a) services by the Department of Posts and the Ministry of Railways (Indian Railways) by way of speed
post, express parcel post, life insurance, and agency services provided to a person other than the Central
Government, State Government, Union territory; [Omitted words, omitted by NN 04/2022 – CT (R), w.e.f.
18.07.2022] [As amended by NN. 13/2023 - CT (R), w.e.f. 20.10.2023]
(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(c) transport of goods or passengers; or
(d) any service, other than services covered under entries (a) to (c) above, provided to business entities.
[Entry No. 6 of NN. 12/2017 CT (R)]
Analysis:
(1) Any service provided by the Central Government, State Government, Union territory or local authority
will not be chargeable to GST except aforesaid 4 categories of services [covered under (a) to (d) above] i.e.
in case of these 4 categories of services, GST will be leviable.
(2) The basic idea behind taxing certain activities of the Government or local authorities is to provide equal
competition to private entities in these areas and to avoid break in Input Tax Credit chain as the taxable
services provided by the Government are normally in the nature of intermediary services.
(3) As per clause (d) of this entry, any service, (other than services covered under clauses (a) to (c) above),
provided to business entities by Government or local authority, are taxable as these are excluded from the
exemption list. But, in this case, if the service recipient is other than business entity, then, GST shall not be
payable as it is not excluded from the exemption list.
(4) As per clause (n) under this notification, ‘Business entity’ means any person carrying out business.
(5) Further, various other services of government and local authority are also exempted from GST by adding
various other entries in this Exemption List, which is discussed in following paras of this chapter.
(6) Furthermore, some services provided to Government, etc. are also exempt from GST by adding various
other entries in this Exemption List, which is also discussed in following paras of this chapter.
(7) As per the settled position of law, the term ‘Government’ include various departments of the Government
(e.g. Income tax department, Police Department, etc.), but, various government companies registered
under the Companies Act, 2013, corporations formed under Central Acts or State Acts or autonomous
institutions set up by a special Act are not included in the term ‘Government’. Therefore, services provided
by/to such entities are not entitled for exemptions given in various exemption entries relating to the
‘Government’. It would also not include regulatory bodies.
(8) For the services provided by the Government to business entities [covered under clause (d) above, except
Renting of Immovable Property to unregistered person], the government departments will not have to get
themselves registered under GST for paying GST, because, in these services GST will be payable by the
service recipient (i.e. the business entities receiving the service) under reverse charge mechanism.
However, for the services covered under clauses (a), (b) & (c) above provided by the Government, etc. to
any person and Renting of Immovable Property provided by the Government, etc. to business entities not
registered in GST, the GST will be payable by the concerned department itself (i.e. by the service provider,
as here reverse charge mechanism does not apply).

1A. Services by the Department of Posts by way of post card, inland letter, book post and ordinary post
(envelopes weighing less than 10 grams).
 284 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

[Entry No. 24C of NN. 12/2017 CT (R), inserted by NN 04/2022 – CT (R), w.e.f. 18.07.2022]
Analysis:
(1) W.e.f. 18.07.2022, all the services by the Department of Posts are taxable except the services by way of post
card, inland letter, book post and ordinary post (envelopes weighing less than 10 grams), whether the
services are provided to government entities or non-government entities.
(2) Accordingly, following are the examples of the services provided by the Department of Posts which are
taxable under GST:
 Speed post, express parcel post, life insurance and the agency services (i.e. intermediary services on
commission basis, e.g. distribution of bonds, passport applications, collection of telephone and
electricity bills, etc.);
 Ordinary post (other than envelopes weighing less than 10 grams);
 Transfer of money through money orders, operation of savings accounts, issue of postal orders,
pension payments and other such services.

Illustration 22:
Indian Post Office department provides you the following information for the month of February, 20XX:
1. Amount received towards speed post services to general public = Rs. 80,00,000
2. Amount received towards ordinary post (of envelopes weighing less than 10 grams) services = Rs. 50,00,000
3. Amount received towards post office life insurance services = Rs. 20,00,000
4. Amount received towards speed post services provided to BSNL for mailing telephone bills to various corporate
clients = Rs. 10,00,000 [not included in (1) above]
5. Amount received towards speed post services provided to CBIC department for mailing various notices to various
assesses = Rs. 2,50,000 [not included in (1) above]
6. Commission received from Reliance communication towards accepting payments of various mobile bills of their
clients in rural area = Rs. 5,00,000
7. Commission received from state government for performing various agency services = Rs. 15,00,000
Compute the value of taxable services, assuming all figures are without taxes.
Answer : Computation of Value of Taxable Services

S.N. Particulars Amount (Rs.)

1 Amount received towards speed post services to general public - [Taxable] 80,00,000

2 Amount received towards ordinary post (of envelopes weighing less than 10 grams) services - Nil
[Exempt as per Entry 24C of NN. 12/2017 - CT(R)]

3 Amount received towards post office life insurance services - [Taxable] 20,00,000

4 Amount received towards speed post services provided to BSNL for mailing telephone bills to 10,00,000
various corporate clients [not included in (1) above] - [Taxable]

5 Amount received towards speed post services provided to CBIC department for mailing 2,50,000
various notices to various assesses [not included in (1) above] - [Taxable]

6 Commission received from Reliance communication towards accepting payments of various 5,00,000
mobile bills of their clients in rural area - [Taxable, agency services by Post office is taxable]

7 Commission received from state government for performing various agency services - 15,00,000
[Taxable, agency services by Post office is taxable]

Total Value of Taxable Services 1,32,50,000

 Exemptions Under GST 285

Illustration 23:
Mumbai Post Office provided the following services during the month of August, 20XX, all charges are exclusive of
GST:

S.N. Services rendered Amount (Rs.)

1) Operation of saving accounts 2,00,000
2) Transfer of money through money orders 3,00,000
3) Book Post services 2,50,000
4) Rural postal life insurance services 1,00,000
5) Distribution of mutual funds, bonds and passport applications 6,00,000
6) Pension payment services 4,00,000
7) Collection of telephone and electricity bills 1,50,000
8) Post Card services 80,000
9) Express parcel post services 5,20,000
10) Speed post services 1,00,000

Compute the value of taxable supply for the month of August, 20XX.
Answer : Computation of Value of Taxable Supply

S.N. Particulars Amount (Rs.)

1) Operation of saving accounts [Taxable] 2,00,000
2) Transfer of money through money orders [Taxable] 3,00,000
3) Book Post services [Exempt as per Entry 24C of NN. 12/2017-CT(R)] Nil
4) Rural postal life insurance services [Taxable] 1,00,000
5) Distribution of mutual funds, bonds and passport applications [Taxable] 6,00,000
6) Pension payment services [Taxable] 4,00,000
7) Collection of telephone and electricity bills [Taxable] 1,50,000
8) Post Card services [Exempt as per Entry 24C of NN. 12/2017-CT(R)] Nil
9) Express parcel post services [Taxable] 5,20,000
10) Speed post services [Taxable] 1,00,000
Total Value of Taxable Supply 23,70,000

2. Services provided by the Central Government, State Government, Union territory or local authority to a
business entity with an aggregate turnover of up to such amount in the preceding financial year as makes it
eligible for exemption from registration under GST.
Explanation : For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not be
applicable to following services :
(i) Clauses (a), (b) and (c) of Entry 6 above.
(ii) Services by way of renting of immovable property.
[Entry No. 7 of NN. 12/2017 CT (R)]
Analysis :
(1) Since, all the services by government or local authority to a business entity are taxable (further, these are
chargeable under Reverse Charge Mechanism), therefore, by making this entry in exemption list,
Government has excluded small business from the purview of GST.
(2) As per clause (zy) under this notification, ‘Renting in relation to immovable property’ means allowing,
286 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an
immovable property, with or without the transfer of possession or control of the said immovable property
and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;
3. Services provided by Central Government, State Government, Union territory or a local authority where the
consideration for such services does not exceed Rs. 5,000.
However, nothing contained in this entry shall apply to services referred in Clause (a), (b) and (c) of Entry 6
above.
Further, in case where continuous supply of service* is provided by the Central Government, State
Government, Union territory or a local authority, the exemption shall apply only where the consideration
charged for such service does not exceed Rs. 5,000 in a F.Y.
[Entry No. 9 of NN. 12/2017 CT (R)]
Analysis : *As per Sec. 2(33) of the CGST Act, 2017, “continuous supply of services” means a supply of
services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a
period exceeding three months with periodic payment obligations and includes supply of such services as the
Government may, subject to such conditions, as it may, by notification, specify.
4. Services provided by the Central Government, State Government, Union territory or local authority to another
Central Government, State Government, Union territory or local authority.
However, nothing contained in this entry shall apply to services referred in clauses (a), (b) and (c) of Entry 6
above. [Entry No. 8 of NN. 12/2017 CT (R)]
5. Services provided by the Central Government, State Government, Union territory or local authority by way of
issuance of passport, visa, driving licence, birth certificate or death certificate. [Entry No. 61 of NN. 12/2017
CT (R)]
6. Services provided by the Central Government, State Government, Union territory or local authority by way of -
(a) registration required under any law for the time being in force;
(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or
public at large, including fire license, required under any law for the time being in force.
[Entry No. 47 of NN. 12/2017 CT (R)]
GST applicability on Seed Certification Tags [Circular No. 100/19/2019-GST, dated 30.04.2019]
Seed testing and certification is a multi-stage process, the charges for which are collected from the seed
producers at different stages. Supply of seed tags to the seed producer is nothing but an element of the one
integrated supply of seed testing and certification. All the charges, including those for issue of seed
certificates/tags by the Seed Certification Agency of Tamil Nadu, Uttarakhand or any other state to the seed
producing organization / companies are collected for the composite supply of seed testing and certification,
which is exempt under NN 12/2017 - CT (R) - Entry No. 47.
Author’s Note: This activity is also covered under Entry No. 54(a) of NN 12/2017 – CT (R) [Agriculture Related
Exemption], which is also exempt from GST.

7. Services by way of licensing, registration and analysis or testing of food samples supplied by the Food Safety
and Standards Authority of India (FSSAI) to Food Business Operators.
[Entry no. 47A of NN 12/2017 CT(R), omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
8. Services by the Employees’ State Insurance Corporation [ESIC] to persons governed under the Employees’
State Insurance Act, 1948. [Entry No. 30 of NN. 12/2017 CT (R)]

9. Services provided by the Employees Provident Fund Organisation [PF] to the persons governed under the
Employees Provident Funds and the Miscellaneous Provisions Act, 1952. [Entry No. 31 of NN. 12/2017 CT (R)]

10. Services by Coal Mines Provident Fund Organisation to persons governed by the Coal Mines Provident Fund
and Miscellaneous Provisions Act, 1948 (46 of 1948). [Entry No. 31A of the NN 12/2017]

11. Services by National Pension System (NPS) Trust to its members against consideration in the form of
 Exemptions Under GST 287

administrative fee. [Entry No. 31A of the NN 12/2017]

12. Services provided by the Insurance Regulatory and Development Authority [IRDA] of India to insurers under
the Insurance Regulatory and Development Authority of India Act, 1999.
[Entry No. 32 of NN. 12/2017 CT (R), omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]

13. Services provided by the Securities and Exchange Board of India [SEBI] set up under the Securities and
Exchange Board of India Act, 1992 by way of protecting the interests of investors in securities and to promote
the development of, and to regulate, the securities market.
[Entry No. 33 of NN. 12/2017 CT (R), omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]

14. Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Co-
operation and Farmer’s Welfare by way of cold chain knowledge dissemination. [Entry No. 58 of NN. 12/2017
CT (R)]

15. Services by way of providing information under the Right to Information Act, 2005 (RTI). [Entry No. 65A of
NN 12/2017 CT (R)]

16. Services by Central Government, State Government, Union territory, local authority or governmental authority
by way of any activity in relation to any function entrusted to a municipality under article 243W of the
Constitution. [Omitted words, omitted by NN 14/2018- C.T. (Rate), w.e.f. 27.07.2018]
[Entry No. 4 of NN. 12/2017 CT (R)]
Note : As per clause (zf) under this notification, “Governmental Authority” means an authority or a board or
any other body -
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with 90% or more participation by way of equity or control, to carry out any function entrusted to a
municipality under article 243W of the Constitution or to a Panchayat under article 243G of the Constitution.
Analysis of Amendment:
Services by Central Government, State Government, Union territory or local authority by way of any activity in
relation to any function entrusted to a Panchayat under article 243G of the Constitution are treated as neither
supply of goods nor supply of services as per Section 7(2) of the CGST Act, 2017 as notified by NN 14/ 2017 –
CT (R), as amended by NN 16/2018 – CT (R), w.e.f. 27.07.2018. Therefore, words “Central Government, State
Government, Union territory or local authority” are omitted from this entry to avoid duplicacy.

17. Services by a Central Government, State Government, Union territory, local authority or Governmental
Authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the
Constitution. [Omitted words, omitted by NN 14/2018- C.T. (Rate), w.e.f. 27.07.2018]
[Entry No. 5 of NN. 12/2017 CT (R)]
Analysis of Amendment:
Services by Central Government, State Government, Union territory or local authority by way of any activity in
relation to any function entrusted to a Panchayat under article 243G of the Constitution are treated as neither
supply of goods nor supply of services as per Section 7(2) of the CGST Act, 2017 as notified by NN 14/ 2017 –
CT (R), as amended by NN 16/2018 – CT (R), w.e.f. 27.07.2018. Therefore, words “Central Government, State
Government, Union territory or local authority” are omitted from this entry to avoid duplicacy.
18. Supply of service by a Government Entity to Central Government, State Government, Union territory, local
authority or any person specified by Central Government, State Government, Union territory or local authority
against consideration received from Central Government, State Government, Union territory or local
authority, in the form of grants.
[Entry No. 9C of NN. 12/2017 CT (R), inserted by NN. 32/2017 CT (R), dated 13.10.2017]
Note : As per clause (zfa) under this notification, “Government Entity” means an authority or a board or any
other body including a society, trust, corporation,
288 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(i) set up by an Act of Parliament or State Legislature; or

(ii) established by any Government,
with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central
Government, State Government, Union Territory or a local authority.
19. Services provided by the Central Government, State Government, Union territory by way of deputing officers
after office hours or on holidays for inspection or container stuffing or such other duties in relation to import
export cargo on payment of Merchant Overtime charges. [Entry No. 65 of NN. 12/2017 CT (R)]
20. Services provided by the Central Government, State Government, Union territory or local authority by way of
tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is
payable to the Central Government, State Government, Union territory or local authority under such contract.
[Entry No. 62 of NN. 12/2017 CT (R)]
21. Services supplied by Central Government, State Government, Union territory to their undertakings or Public
Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the
banking companies and financial institutions. [Entry no. 34A of NN 12/2017 CT (R)].
22. Services provided by the Central Government, State Government, Union territory or local authority by way of
assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of all
life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products.
[Entry No. 63 of NN. 12/2017 CT (R)]
23. Services by an old age home run by Central Government, State Government or by an entity registered under
section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years or more) against consideration upto
Rs. 25,000/- per month per member, provided that the consideration charged is inclusive of charges for
boarding, lodging and maintenance. [Entry No. 9D of NN. 12/2017 CT (R)]
24. Services provided by the Central Government, State Government, Union territory or local authority by way of
assignment of right to use any natural resource where such right to use was assigned by the Central
Government, State Government, Union territory or local authority before the 1st April, 2016.
However, the exemption shall apply only to tax payable on one time charge payable, in full upfront or in
installments, for assignment of right to use such natural resource. [EntryNo.64 of NN.12/2017CT (R)]
25. Services provided by the Central Government, State Government, Union territory or local authority by way of
allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the
period prior to 01.04.2016, on payment of licence fee or spectrum user charges, as the case may be. [Entry No.
42 of NN. 12/2017 CT (R)]
26. Services supplied by a State Government to Excess Royalty Collection Contractor (ERCC) by way of assigning
the right to collect royalty on behalf of the State Government on the mineral dispatched by the mining lease
holders.
Provided that at the end of the contract period, ERCC shall submit an account to the State Government and
certify that the amount of goods and services tax deposited by mining lease holders on royalty is more than the
goods and services tax exempted on the service provided by State Government to the ERCC of assignment of
right to collect royalty and where such amount of goods and services tax paid by mining lease holders is less
than the amount of goods and services tax exempted, the exemption shall be restricted to such amount as is
equal to the amount of goods and services tax paid by the mining lease holders and the ERCC shall pay the
difference between goods and services tax exempted on the service provided by State Government to the ERCC
of assignment of right to collect royalty and goods and services tax paid by the mining lease holders on royalty.
Explanation.- “mining lease holder” means a person who has been granted mining lease, quarry lease or license
or other mineral concession under the Mines and Minerals (Development and Regulation) Act, 1957, the rules
made thereunder or the rules made by a State Government u/s 15(1) of the Mines and Minerals (Development
and Regulation) Act, 1957.
[Entry no. 65B of NN 12/2017 CT(R), inserted by NN 14/2018 CT(R) w.e.f. 27.07.2018]
Note: As per Rajasthan Minor Mineral Concession Rules, 2017, “Excess Royalty Collection Contract” means a
contract to collect royalty in excess of annual dead rent and any other charges as may be specified in the
contract, on behalf of the Government for specified mineral dispatched by the mining lessee, from the area
 Exemptions Under GST 289

specified in the contract.

27. Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable
in respect of service by way of granting long term lease of 30 years, or more of industrial plots or plots for
development of infrastructure for financial business, provided by the State Government Industrial
Development Corporations or Undertakings or by any other entity having 20% or more ownership of Central
Government, State Government, Union territory directly or through an entity which is wholly owned by the
Central government, State Government or Union territory to the industrial units or the developers in any
industrial or financial business area.
Conditions:
(i) The leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial
activity in an industrial or financial business area;
(ii) The State Government concerned shall monitor and enforce the above condition as per the order issued by
the State Government in this regard;
(iii) In case of any violation or subsequent change of land use, due to any reason whatsoever, the original
lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally
liable to pay the amount of exempted GST, along with applicable interest & penalty; and
(iv) The lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or
sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to
subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the GST
was exempted on the long term lease of the plots by the original lessor to the original lessee subject to
above condition and that the parties to the said agreements undertake to comply with the same.
[Entry No. 41 of NN. 12/2017 CT (R)]
Analysis:
(i) [Circular No. 101/20/2019 – GST, dated 30.04.2019]: This exemption is admissible irrespective of whether
such upfront amount is payable or paid in one or more instalments, provided the amount is determined
upfront.
(ii) Whether location charges or preferential location charges (PLC) collected in addition to the lease
premium for long term lease of land constitute part of the lease premium or of upfront amount charged
for long term lease of land and are eligible for the same tax treatment [Circular No. 177/09/2022 – GST,
dated 03.08.2022]
 Allowing choice of location of plot is integral part of supply of long-term lease of plot and therefore,
location charge is nothing but part of consideration charged for long term lease of plot. Being charged
upfront along with the upfront amount for the lease, the same is exempt.
 Accordingly, as per recommendation of the GST Council, it is clarified that location charges or
preferential location charges (PLC) paid upfront in addition to the lease premium for long term lease of
land constitute part of upfront amount charged for long term lease of land and are eligible for the same
tax treatment, and thus eligible for the above exemption.

28. Transmission or distribution of electricity by an electricity transmission or distribution utility.

[Entry No. 25 of NN. 12/2017 CT (R)]
Notes :
1. As per clause (z) under this notification, ‘Electricity transmission or distribution utility’ means the
Central Electricity Authority; a State Electricity Board; the Central Transmission Utility or a State
Transmission Utility notified under the Electricity Act, 2003 or a distribution or transmission licensee
under the said Act, or any other entity entrusted with such function by the Central Government or, as the
case may be, the State Government.
2. As per clause (p) under this notification, ‘Central Electricity Authority’ means the authority constituted
under section 3 of the Electricity (Supply) Act, 1948.
3. As per clause (q) under this notification, ‘Central Transmission Utility’ shall have the same meaning as
290 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

assigned to it in clause (10) of section 2 of the Electricity Act, 2003.

Analysis: Any person would be covered under this exemption entry, only if it is covered under the definition
of “electricity transmission or distribution utility”.
29. Services supplied by electricity distribution utilities by way of construction, erection, commissioning, or
installation of infrastructure for extending electricity distribution network upto the tube well of the farmer or
agriculturalist for agricultural use. [Entry No. 10A of NN 12/2017 CT (R)]

Illustration 24 :
Whether the activities carried by electricity distribution companies of India (DISCOMs) against recovery of charges
from consumers under State Electricity Act are exempt from GST?
Answer : [Circular No. 34/ 8/2018 – GST, dated 01.03.2018]
Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is
exempt from GST under notification No. 12/2017- CT (R), Sl. No. 25.
However, the other services such as, -
i. Application fee for releasing connection of electricity;
ii. Rental Charges against metering equipment;
iii. Testing fee for meters/ transformers, capacitors etc.;
iv. Labour charges from customers for shifting of meters or shifting of service lines
v. Charges for duplicate bill;
provided by DISCOMS to consumer are taxable, as these are not covered under the exemption entry.
30. Services by a foreign diplomatic mission located in India. [Entry No. 59 of NN. 12/2017 CT (R)]
31. Services by a specified organisation in respect of a religious pilgrimage facilitated by the Government of India,
under bilateral arrangement. [Entry No. 60 of NN. 12/2017 CT (R)]
Note : As per clause (zzf) under this notification, ‘Specified organisation’ shall mean, -
 Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or
 ‘Committee’ or ‘State Committee’ as defined in section 2 of the Haj Committee Act, 2002.
Example
KMVN supplies numerous services, namely, medical facilities, catering services, security, accommodation
services, etc. to the pilgrims undertaking Kailash-Mansarovar pilgrimage. Such services provided by KMVN in
respect of the religious pilgrimage to Kailash-Mansarovar are covered under entry 60 and thus, are exempt.
32. Pure services provided to Government:
 Pure services (excluding works contract service or other composite supplies involving supply of any
goods)
 provided to the Central Government, State Government or Union territory or local authority or a
Governmental authority or a Government Entity [omitted words, omitted by NN 16/2021 - CT(R), w.e.f.
01.01.2022]
 by way of any activity:
– in relation to any function entrusted to a Panchayat under article 243G of the Constitution or
– in relation to any function entrusted to a Municipality under article 243W of the Constitution
[Entry No. 3 of NN. 12/2017 CT (R)]
33. Composite supply provided to Government:
 Composite supply of goods and services in which the value of supply of goods constitutes not more than
25% of the value of the said composite supply
 provided to the Central Government, State Government or Union territory or local authority or a
 Exemptions Under GST 291

Governmental authority or a Government Entity [omitted words, omitted by NN 16/2021 - CT(R), w.e.f.
01.01.2022]
 by way of any activity:
– in relation to any function entrusted to a Panchayat under article 243G of the Constitution or
– in relation to any function entrusted to a Municipality under article 243W of the Constitution.
[Entry No. 3A of NN 12/2017 CT (R)]
Clarification on Applicability of GST on ambulance services provided to Government by private service
providers under the National Health Mission (NHM) [Circular No. 51/25/2018 GST, dated 31.07.2018]

1. The service of transportation in ambulance provided by State Governments and private service providers
(PSPs) to patients are exempt under notification No. 12/2017 CT (R) – Entry no. 74(b).
2. Clarification is required regarding taxability of ambulance service provided by PSPs to State
Governments under National Health Mission, which is discussed in subsequent paras.
3. Functions of ‘Health and sanitation’ are entrusted to Panchayats under Article 243G of the Constitution of
India read with Eleventh Schedule. Function of ‘Public health’ is entrusted to Municipalities under Article
243W of the Constitution read with Twelfth schedule to the Constitution. Thus ambulance services are an
activity in relation to the functions entrusted to Panchayats and Municipalities under Articles 243G and
243W of the Constitution.
4. In view of the above, it is clarified that the service provided by PSPs to the State Governments by way of
transportation of patients on behalf of the State Governments against consideration in the form of fee or
otherwise charged from the State Government, it is clarified that the same would be exempt under-
a. Sl. No. 3 of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 if it is a pure service and not
a composite supply involving supply of any goods, and
b. Sl. No. 3A of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 if it is a composite supply
of goods and services in which the value of supply of goods constitutes not more than 25% of the
value of the said composite supply.
Clarification on GST on milling of wheat into flour or paddy into rice for distribution by State
Governments under PDS [Circular No. 153/09/2021 – GST, dated 17.06.2021]

1. Whether composite supply of service by way of milling of wheat into wheat flour, alongwith fortification
(adding vitamins & minerals to increase nutritional value), by any person to a State Government for
distribution of such wheat flour under Public Distribution System is eligible for exemption under entry No.
3A of NN 12/2017 - CT (R).
2. Entry at Sl. No. 3A of NN 12/2017 - CT (R) exempts “composite supply of goods and services in which the
value of supply of goods constitutes not more than 25% of the value of the said composite supply provided
to the Central Government, State Government or Union territory or local authority by way of any activity
in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to
any function entrusted to a Municipality under article 243W of the Constitution”.
3. Public Distribution is specifically covered under the scope of the activities that may be entrusted to a
Panchayat under Article 243G of the Constitution. Hence, said entry No. 3A would apply to composite
supply of milling of wheat and fortification thereof by miller, or of paddy into rice, provided that value of
goods supplied in such composite supply (goods used for fortification, packing material, etc.) does not
exceed 25% of the value of composite supply. It is a matter of fact as to whether the value of goods in such
composite supply is up to 25% and requires ascertainment on case-to-case basis.
Clarification on Applicability of GST on sanitation and conservancy services supplied to Army and other
Central and State Government departments [Circular No. 177/09/2022 – GST, dated 03.08.2022]

1. The functions entrusted to Municipalities and Panchayats under articles 243W & 243G of the Indian
Constitution also include the activities of Sanitation and conservancy services.
2. If such services are provided to Indian Army or any other Government Ministry/Department, in the same
manner as a local authority does for the general public, then, the same will be eligible for exemption
under Sl. No. 3 and 3A of the exemption notification no. 12/2017 - CT (R). Otherwise, it will be chargeable
292 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

to GST.
Clarification on whether supply of pure services and composite supplies by way of horticulture /
horticulture works (where the value of goods constitutes not more than 25% of the total value of supply)
made to Central Public Works Department (CPWD) are eligible for exemption from GST under Sr. No. 3
and 3A of NN 12/2017 – CT (R) [Circular No. 206/18/2023 – GST, dated 31.10.2023]

1. Public parks in government residential colonies, government offices and other public areas are developed
and maintained by CPWD.
2. Maintenance of community assets, urban forestry, protection of the environment and promotion of
ecological aspects are functions entrusted to Panchayats and Municipalities under Article 243G and
243W of the constitution.
3. Accordingly, it is clarified that supply of pure services and composite supplies by way of
horticulture/horticulture works (where the value of goods constitutes not more than 25% of the total
value of supply) made to CPWD are eligible for exemption from GST under Sr. No. 3 and 3A of NN
12/2017 - CT (R).
33A Services provided to a Governmental Authority by way of -
(a) Water supply; (b) Public health; (c) Sanitation conservancy; (d) Solid waste management; and (e) Slum
improvement and upgradation. [Entry No. 3B of NN. 12/2017 CT (R), inserted by NN. 13/2023 - CT (R), w.e.f.
20.10.2023]
Clarification on whether District Mineral Foundations Trusts (DMFTs) set up by the State Governments are
Governmental Authorities and thus eligible for the same exemptions from GST as available to any other
Governmental Authority [Circular No. 206/18/2023 – GST, dated 31.10.2023]

DMFTs work for the interest and benefit of persons and areas affected by mining related operations by
regulating receipt and expenditure from the respective Mineral Development Funds created in the concerned
district. They provide services related to drinking water supply, environment protection, health care facilities,
education, welfare of women and children, supply of medical equipment, etc.
These activities are similar to activities that are enlisted in 11th Schedule and 12th Schedule of the Constitution.
The ultimate users of the various schemes under DMF are individuals, families, women and children,
farmers/producer groups, Self Help Groups of the mining affected areas etc. The services/supplies out of DMF
fund are provided free of charge and no consideration is realized from the beneficiaries by DMF against such
services.
Accordingly, it is clarified that DMFT set up by the State Governments are Governmental Authorities and thus
eligible for the same exemptions from GST as available to any other Governmental Authority.
34. Services of leasing of assets (rolling stock assets including wagons, coaches, locos) by the Indian Railways
Finance Corporation to Indian Railways. [Entry No. 43 of NN. 12/2017 CT (R), omitted by NN 07/2021 – CT
(R), w.e.f. 01.10.2021]
35. Services provided by the Goods and Services Tax Network [GSTN] to the Central Government or State
Governments or Union territories for implementation of Goods and Services Tax. [Entry No. 51 of NN. 12/2017
CT (R), omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
36. Services provided to the Central Government, State Government, Union territory under any insurance scheme
for which total premium is paid by the Central Government, State Government, Union territory. [Entry No. 40
of NN. 12/2017 CT (R)]
Clarifications regarding applicability of GST [Circular No. 16/16/2017-GST, dated 15.11.2017]
Issue: Is GST leviable on General Insurance policies provided by a State Government to employees of the State
government/Police personnel, employees of Electricity Department or students of colleges/ private schools,
etc.
(a) where premium is paid by State Government and
(b) where premium is paid by employees, students, etc.?
Clarification:
(a) It is hereby clarified that services provided to the Central Government, State Government, Union territory
 Exemptions Under GST 293

under any insurance scheme for which total premium is paid by the Central Government, State
Government, Union territory are exempt from GST under entry no. 40 of NN. 12/2017 CT (R).
(b) Further, services provided by State Government by way of general insurance (managed by government) to
employees of the State government / Police personnel, employees of Electricity Department or students
are also exempt vide entry no. 6 of NN. 12/2017 CT (R) which exempts Services by Central Government,
State Government, Union territory or local authority to individuals.
37. Services provided to the Central Government, State Government, Union territory administration under any
training programme for which 75% or more of the total expenditure is borne by the Central Government,
State Government, Union territory administration. [Entry No. 72 of NN. 12/2017 CT (R)]
38. Services provided to the Central Government, by way of transport of passengers with or without
accompanied belongings, by air, embarking from or terminating at a Regional Connectivity Scheme airport,
against consideration in the form of viability gap funding.
However, the said exemption shall not apply on or after the expiry of a period of 3 years from the date of
commencement of operations of the regional connectivity scheme airport as notified by the Ministry of Civil
Aviation. [Entry No. 16 of NN. 12/2017 CT (R)]
39. Service provided by Fair Price Shops to Central Government, State Government or Union Territory by way
of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against
consideration in the form of commission or margin. [Entry No. 11A and 11B of NN 12/2017 CT (R), are
merged by NN 47/2017 - CT(R), w.e.f. 15.11.2017]
40. Service provided by Fair Price Shops to State Governments or Union territories by way of sale of kerosene,
sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission
or margin. [Entry No. 11B of NN. 12/2017 CT (R), omitted by NN 47/2017 CT (R), w.e.f. 15.11.2017]
41. Taxable services, provided or to be provided, by a Technology Business Incubator (TBI) or a Science and
Technology Entrepreneurship Park (STEP) recognised by the National Science and Technology
Entrepreneurship Development Board of the Department of Science and Technology, Government of India or
bio-incubators recognised by the Biotechnology Industry Research Assistance Council, under the Department
of Biotechnology, Government of India. [Entry No. 48 of NN. 12/2017 CT (R)]
42. Services provided by an incubatee up to a total turnover of Rs. 50 lakh in a financial year subject to the
following conditions, namely :
(a) the total turnover had not exceeded Rs. 50 lakh during the preceding financial year; and
(b) a period of three years has not elapsed from the date of entering into an agreement as an incubatee.
[Entry No. 44 of NN. 12/2017 CT (R)]
Notes :
(1) As per clause (zh) under this notification, ‘Incubatee’ means an entrepreneur located within the premises
of a Technology Business Incubator or Science and Technology Entrepreneurship Park recognized by the
National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of
Science and Technology, Government of India and who has entered into an agreement with the
Technology Business Incubator or the Science and Technology Entrepreneurship Park to enable himself to
develop and produce hi-tech and innovative products.
(2) Example :
Year Total Turnover Exempted Turnover Taxable Turnover
1 60 Lacs 50 Lacs 10 Lacs
2 50 Lacs - 50 Lacs
3 45 Lacs 45 Lacs -
4 50 Lacs - 50 Lacs
5 20 Lacs - 20 Lacs
 294 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

43. Services by way of giving on hire –

(a) to a state transport undertaking, a motor vehicle meant to carry more than 12 passengers; or
(aa) to a local authority, an Electrically operated vehicle meant to carry more than 12 passengers
[Explanation.- For the purposes of this entry, “Electrically operated vehicle” means vehicle falling under
Chapter 87 in the First Schedule to the Customs Tariff Act, 1975 which is run solely on electrical energy
derived from an external source or from one or more electrical batteries fitted to such road vehicle.]; or
(b) to a goods transport agency, a means of transportation of goods; or
(c) motor vehicle for transport of students, faculty and staff, to a person providing services of
transportation of students, faculty and staff to an educational institution providing services by way of
pre-school education and education upto higher secondary school or equivalent.
[Entry No. 22 of NN. 12/2017 CT (R)]
Examples:
(i) If a bus is given on hire to a state transport undertaking, then, GST is exempted on the hire charges.
(ii) Similarly, if a truck is given on hire to a GTA, then, GST is exempted on the hire charges.

44. Services by way of granting National Permit to a goods carriage to operate through-out India/contiguous
States. [Entry No. 61A of NN. 12/2017 CT (R)]
Analytical Note :
Services provided by Police/security agencies of Government to PSUs/corporate entities/sports events held by private
entities are not exempt from GST.
Further, recipients are required to pay the tax under reverse charge mechanism on the amount of consideration paid to
Government for such supply of services.
Example: The Karnataka Cricket Association, Bangalore requests the Commissioner of Police, Bangalore to provide
security in and around the Cricket Stadium for the purpose of conducting thecricket match. The Commissioner of Police
arranges the required security for an agreed consideration. In this case, services of providing security by thepolice
personnel are not exempt. As the services are provided by Government, Karnataka Cricket Association is liable to pay
the tax on the consideration paid, albeit under reverse charge mechanism.
Illustration 25 :
Whether the guarantee provided by State Government to state owned companies against guarantee commission, is
taxable under GST?
Answer :
Services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector
Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the banking
companies and financial institutions are exempt from GST as per entry no. 34A of NN 12/2017.
Clarification on Applicability of GST on Accommodation Services supplied by Air Force Mess to its Personnel –
[Circular No. 190/02/2023 - GST, dated 13.01.2023]
All services supplied by Central Government, State Government, Union Territory or local authority to any person other
than business entities (barring a few specified services such as services of postal department, transportation of goods
and passengers, etc.) are exempt from GST vide Sl. No. 6 of NN. 12/2017 – CT (R). Therefore, as recommended by the GST
Council, it is hereby clarified that accommodation services provided by Air Force Mess and other similar messes, such
as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business
entity are covered by Sl. No. 6 of NN. 12/2017 – CT (R), provided the services supplied by such messes qualify to be
considered as services supplied by Central Government, State Government, Union Territory or local authority.

Banking Related Services

1. Services by the Reserve Bank of India. [Entry No. 26 of NN. 12/2017 CT (R), omitted by NN. 04/2022 CT (R),
w.e.f. 18.07.2022]
2. Services received by the RBI, from outside India in relation to management of foreign exchange reserves.
[Entry No. 42 of NN. 09/2017 IT (R), omitted by NN 04/2022 IT (R), w.e.f. 18.07.2022]
 Exemptions Under GST 295

3. Services by way of -
(a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or
discount (other than interest involved in credit card services);
(b) inter se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or
amongst banks and such dealers.
[Entry No. 27 of NN. 12/2017 CT (R)]
Note : As per clause (zj) under this notification, ‘Interest’ means interest payable in any manner in respect of
any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) but does
not include any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of
any credit facility which has not been utilized.
Analysis :
(1) If any service charges or processing fees or documentation charges or inspection charges, etc. are
recovered in addition to interest on loan, advance or a deposit, then, such charges would be taxable under
GST.
(2) Discounting of Bills of Exchange is covered in this exemption entry only to the extent of its consideration
as represented by way of discount, i.e. charges other than discounting charges are taxable.
(3) The services in the case of the Credit Card are by way of levy of issuing charges or the commission
charged from merchants, etc. The interest charged for failure to pay due amount at the due date have been
specifically excluded from this exemption entry. Therefore, these are taxable.
(4) Penal interest charged for delay in repayment is considered as interest as per loan agreements. Therefore,
not taxable under GST.
(5) Services provided by banks or authorized dealers of foreign exchange by way of sale of foreign exchange
to general public against commission are taxable under GST. But, Services provided by banks or
authorized dealers of foreign exchange by way of sale of foreign exchange to another bank or authorized
dealer of foreign exchange against commission are covered under this entry and hence, exempt from GST.
(6) Any service charge other than those covered under this exemption entry would be chargeable to GST. For
e.g. ATM card maintenance charge, transaction charges, merchant banking charges, locker rent, banker to
an issue (IPO) charges, etc. are not exempt from GST and hence, taxable under GST.
(7) Mere transactions in money would be outside the ambit of definition of ‘goods’ as well as ‘service’ (e.g.
mere transactions in Commercial Paper (CP) or Certificates of Deposit (CD) are mere transactions in
money, as these are in the nature of promissory note, etc.).
(8) The terms ‘Goods’ and ‘Service’ exclude ‘securities’ and the definition of ‘securities’ include ‘derivatives’.
Therefore, transactions in instruments like interest rate swaps and foreign exchange swaps would be
excluded from the definition of ‘goods’ and ‘service’ as such instruments are derivatives, hence, not
chargeable to GST.
(9) Forward contracts in commodities or currencies would not fall in the ambit of definition of ‘goods’ or
‘service’. Therefore, not chargeable to GST. Future contracts are similar to forward contracts, hence, not
chargeable to GST.
(10) However, if any separate consideration (commission, etc.) is charged for the activity relating to
transactions in money or transfer of title in goods, then, such consideration (commission, etc.) would be
chargeable to GST. Therefore, GST would be levied on service charges or documentation fees or service
fees or broking charges, normally charged for various transactions in money or for transfer of title in
goods including charges for making drafts, letter of credit issuance charges, service charges relating to
issuance of Commercial Paper (CP) or Certificates of Deposit (CD) or transactions in securities or forward
contract or future contracts, etc.
(11) Repos and reverse repos transactions entered into by bank are having the characteristics of loans and
deposits for interest, therefore, they are covered under this entry and hence, exempt from GST.
(12) Clarification regarding applicability of GST on additional / penal interest – [Circular No. 102/21/2019,
296 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

dated 28.06.2019]
1. Various representations have been received from the trade and industry regarding applicability of GST
on delayed payment charges in case of late payment of Equated Monthly Instalments (EMI). An EMI is
a fixed amount paid by a borrower to a lender at a specified date every calendar month. EMIs are used
to pay off both interest and principal every month, so that over a specified period, the loan is fully paid
off along with interest. In cases where the EMI is not paid at the scheduled time, there is a levy of
additional / penal interest on account of delay in payment of EMI.
2. Doubts have been raised regarding the applicability of GST on additional / penal interest on the
overdue loan i.e. whether it would be exempt from GST in terms of Sl. No. 27 of NN 12/2017 - CT (R)
or such penal interest would be treated as a separate taxable supply of services covered under entry
5(e) of Schedule II of the CGST Act i.e. “agreeing to the obligation to refrain from an act, or to tolerate
an act or a situation, or to do an act”. In order to ensure uniformity in the implementation of the
provisions of the law, CBIC has issued the following clarification.
3. Generally, following two transaction options involving EMI are prevalent in the trade:-
 Case – 1: X sells a mobile phone to Y. The cost of mobile phone is Rs 40,000/-.
However, X gives Y an option to pay in installments, Rs 11,000/- every month before 10 th day of
the following month, over next four months (Rs 11,000 x 4 = Rs. 44,000/-). Further, as per the
contract, if there is any delay in payment by Y beyond the scheduled date, Y would be liable to pay
additional/penal interest amounting to Rs. 500/- per month for the delay. In some instances, X is
charging Y Rs. 40,000/- for the mobile and is separately issuing another invoice for providing the
services of extending loans to Y, the consideration for which is the interest of 2.5% per month and
an additional/penal interest amounting to Rs. 500/- per month for each delay in payment.
 Case – 2: X sells a mobile phone to Y. The cost of mobile phone is Rs 40,000/-. Y has the option to
avail a loan at interest of 2.5% per month for purchasing the mobile from M/s ABC Ltd. The terms
of the loan from M/s ABC Ltd. allows Y a period of four months to repay the loan and an
additional / penal interest @ 1.25% per month for any delay in payment.
4. As per the provisions of section 15(2)(d) of the CGST Act, the value of supply shall include “interest or
late fee or penalty for delayed payment of any consideration for any supply”. Further in terms of Sl.
No. 27 of NN 12/2017 - CT (R), “services by way of (a) extending deposits, loans or advances in so far
as the consideration is represented by way of interest or discount (other than interest involved in credit
card services)”is exempted.
5. Accordingly, based on the above provisions, the applicability of GST in both cases listed in para 3
above would be as follows:
 Case 1: As per the provisions of section 15(2)(d) of the CGST Act, the amount of penal interest is to
be included in the value of supply. The transaction between X and Y is for supply of taxable goods
i.e. mobile phone.
Accordingly, the penal interest would be taxable as it would be included in the value of the
mobile, irrespective of the manner of invoicing.
 Case 2: The additional / penal interest is charged for a transaction between Y and M/s ABC Ltd.,
and the same is getting covered under Sl. No. 27 of NN 12/2017 - CT (R). Accordingly, in this case
the 'penal interest' charged thereon on a transaction between Y and M/s ABC Ltd. would not be
subject to GST, as the same would be covered under exemption NN 12/2017 - CT (R). The value of
supply of mobile by X to Y would be Rs. 40,000/- for the purpose of levy of GST.
6. It is further clarified that the transaction of levy of additional / penal interest does not fall within the
ambit of entry 5(e) of Schedule II of the CGST Act i.e. “agreeing to the obligation to refrain from an act,
or to tolerate an act or a situation, or to do an act”, as this levy of additional / penal interest satisfies
the definition of “interest” as contained in NN 12/2017 - CT (R). It is further clarified that any service
fee/charge or any other charges that are levied by M/s ABC Ltd. in respect of the transaction related to
extending deposits, loans or advances does not qualify to be interest as defined in NN 12/2017 - CT
(R), and accordingly will not be exempt.
 Exemptions Under GST 297

4. Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders under
Pradhan Mantri Jan Dhan Yojana (PMJDY). [Entry No. 27A of NN. 12/2017 CT (R)]

Illustration 26 : (Banking Service)

X Bank Ltd., furnishes the following information relating to services provided and the gross amount received:
Particulars Rs. in lakhs
Merchant Banking Services 8
Asset Management (including portfolio management) 3
Service charges for services to the Government of India 1.5
Interest on Overdraft and Cash credits 2
Banker to the issue 5
Locker rent 2
Compute the value of taxable services, assuming all figures are exclusive of GST.
Answer: Calculation of Value of Taxable Services of X Bank Ltd.
Particulars Rs. in lakhs
Merchant Banking Services – Taxable 8
Asset Management (including portfolio management) - Taxable 3
Service charges for services to the Government of India - Taxable 1.5
Interest on Overdraft and Cash Credits - Not Taxable [Since, it is specifically covered under -
exemption list Entry No. 27 of NN. 12/2017 CT (R)]
Banker to the issue – Taxable 5
Locker rent – Taxable 2
Total Value of Taxable Services 19.5
Illustration 27 : (Banking Service)
Robinson Bank Ltd. furnishes the following information relating to services provided and the gross amount
received during the month of December, 20XX. Compute the value of taxable service.
S.N. Particulars Rs. in lakhs
(i) Amount of commission received for debt collection service 10
(ii) Discount earned on bills discounted 4.5
(iii) Dealing in sale and purchase of forward contract 5.7
(iv) Charges received on credit card and debit card facilities extended 3.8
(v) Penal interest recovered from the customers for the delay in repayment of loan 2.6
(vi) Commission received for service rendered to Government for tax collection 6.0
(vii) Interest earned on reverse repo transaction 25.0
Show the workings with explanation wherever required, assuming all figures are exclusive of GST.
Answer : Computation of the Value of Taxable Services
S.N. Particulars Amount in Rs.
(i) Commission received on debt collection service – Taxable 10,00,000
(ii) Discount earned on bills discounted - Not Taxable -
[Since, it is specifically covered under exemption list Entry No. 27 of NN. 12/2017 CT
(R)]
(iii) Dealing in sale and purchase of forward contract - Not Taxable -
[Since, it is trading of securities which is specifically excluded from the definition of
goods as well as services]
298 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(iv) Charges received on credit card and debit card facilities extended – Taxable 3,80,000
(v) Penal interest charged for the delay in repayment – Not Taxable -
[It is considered as interest as per loan agreements. And interest is specifically
covered under exemption list Entry No. 27 of NN. 12/2017 CT (R). Therefore, not
taxable under GST]
(vi) Commission received for services rendered to Government for collection of taxes – 6,00,000
Taxable
(vii) Interest earned on Reverse repo transactions – Not Taxable -
[Not taxable, as it is in the nature of interest. And interest is specifically covered
under exemption list Entry No. 27 of NN. 12/2017 CT (R). Therefore, not taxable
under GST]
Total Value of Taxable Services 19,80,000
Illustration 28 : (Banking Service)
Pankaj Bank Ltd., a registered person in GST, furnishes the following information relating to services provided
and the Gross amount received :
(i) Locker rent - Rs. 12 lakhs
(ii) Banker for the issue - Rs. 15 lakhs
(iii) Asset Management (including portfolio management) - Rs. 8 lakhs
(iv) Interest earned on OD and CC facilities - Rs. 80 lakhs
(v) Penal interest charged for delay in repayment - Rs. 10 lakhs
(vi) Processing fees charged for granting loan - Rs. 13 lakhs
(vii) Processing fees charged from Gaurav Bank Ltd. for inter-bank loan granted to them [not included in
(vi) above] - Rs. 2 lakhs
(viii) Merchant Banking Services - Rs. 4 lakhs
(ix) Debit cards and Credit cards issuing charges - Rs. 1 lakh
(x) Commission charged from merchants for payments made through credit cards and debit cards - Rs. 2
lakhs
(xi) Interest charged from credit card holders @ 3% per month for delay in repayment of amount used by
payment through credit cards - Rs. 3 lakhs
(xii) Interest earned on repos and reverse repos transactions entered into by bank - Rs. 10 lakhs.
Compute the value of Taxable services under “Banking and Other Financial Service”, assuming all figures
given above are exclusive of GST.
Answer :
Sr. No. Particulars Rs. in lakhs
(i) Locker rent – Taxable 12
(ii) Banker for the issue – Taxable 15
(iii) Asset Management (including portfolio management) – Taxable 8
(iv) Interest earned on OD and CC facilities – Exempt -
[Interest is specifically covered under exemption list Entry No. 27 of NN. 12/2017
CT (R). Therefore, not taxable under GST]
(v) Penal interest charged for delay in repayment - Exempt -
[It is considered as interest as per loan agreements. And interest is specifically
covered under exemption list Entry No. 27 of NN. 12/2017 CT (R). Therefore, not
taxable under GST]
(vi) Processing fees charged for granting loan – Taxable 13
 Exemptions Under GST 299

(vii) Processing fees charged from Gaurav Bank Ltd. for inter-bank loan granted to them 2
[not included in (vi) above] – Taxable [It is taxable, because, only inter-bank foreign
exchange transactions are covered under Entry No. 27 of exemption list and not any
other inter-bank transactions.]
(viii) Merchant Banking Services – Taxable 4
(ix) Debit cards and Credit cards issuing charges – Taxable 1
(x) Commission charged from merchants for payments made through credit cards and 2
debit cards – Taxable
(xi) Interest charged from credit card holders @ 3% per month for delay in repayment 3
of amount used by payment through credit cards – Taxable
[The interest charged for failure to pay due amount at the due date have been
specifically excluded from this exemption entry. Therefore, these are taxable.]
(xii) Interest earned on repos and reverse repos transactions entered into by bank – -
Exempt [Interest is specifically covered under exemption list Entry No. 27 of NN.
12/2017 CT (R). Therefore, not taxable under GST]
Total Value of Taxable Services 60.00
5. Services by an acquiring bank, to any person in relation to settlement of an amount upto Rs. 2,000/- in a single
transaction transacted through credit card, debit card, charge card or other payment card service.
Explanation: For the purposes of this entry, “acquiring bank” means any banking company, financial
institution including non-banking financial company or any other person, who makes the payment to any
person who accepts such card. [Entry No. 34 of NN. 12/2017 CT (R)]
Clarification on Applicability of GST on incentive paid by Ministry of Electronics and Information
Technology (MeitY) to Acquiring Banks under Incentive scheme for promotion of RuPay Debit Cards and
low value BHIM-UPI transactions [Circular No. 190/02/2023 - GST, Dated 13.01.2023]:
(i) Under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM- UPI transactions,
the Government pays the acquiring banks an incentive as a percentage of value of RuPay Debit card
transactions and low value BHIM-UPI transactions up to Rs. 2,000/-.
(ii) The Payments and Settlements Systems Act, 2007 prohibits banks and system providers from charging
any amount from a person making or receiving a payment through RuPay Debit cards or BHIM-UPI.
(iii) The service supplied by the acquiring banks in the digital payment system in case of transactions through
RuPay/BHIM UPI is the same as the service that they provide in case of transactions through any other
card or mode of digital payment. The only difference is that the consideration for such services, instead of
being paid by the merchant or the user of the card, is paid by the central government in the form of
incentive. However, it is not a consideration paid by the central government for any service supplied by
the acquiring bank to the Central Government. The incentive is in the nature of a subsidy directly linked
to the price of the service and the same does not form part of the taxable value of the transaction in view
of the provisions of section 2(31) and section 15 of the CGST Act, 2017.
(iv) As recommended by the Council, it is hereby clarified that incentives paid by MeitY to acquiring banks
under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions
are in the nature of subsidy and thus not taxable.

6. Services by the following persons in respective capacities –

(a) business facilitator or a business correspondent to a banking company with respect to accounts in its
rural area branch;
(b) any person as an intermediary to a business facilitator or a business correspondent with respect to
services mentioned in entry (a); or
(c) business facilitator or a business correspondent to an insurance company in a rural area.
[Entry No. 39 of NN. 12/2017 CT (R)]
Note :
300 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(1) As per clause (o) under this notification, ‘Business facilitator or business correspondent’ means an
intermediary appointed under the business facilitator model or the business correspondent model by a
banking company or an insurance company under the guidelines issued by the Reserve Bank of India.
(2) As per clause (zzb) under this notification, ‘Rural area’ means the area comprised in a village as defined in
land revenue records, excluding the area under any municipal committee, municipal corporation, town
area committee, cantonment board or notified area committee; or any area that may be notified as an
urban area by the Central Government or a State Government;
(3) GST on Services of Business Facilitator (BF) or a Business Correspondent (BC) to Banking Company
[Circular No. 86/05/2019- GST, dated 01.01.2019]
Issue: What is the value to be adopted for the purpose of computing GST on services provided by BF/BC
to a banking company?
Clarification:
As per RBI’s Circular No. [Link]. 58/22.01.001/2005-2006 dated 25.01.2006 and subsequent
instructions on the issue (referred to as ‘guidelines’ hereinafter), banks may pay reasonable
commission/fee to the BC, the rate and quantum of which may be reviewed periodically. The agreement
of banks with the BC specifically prohibits them from directly charging any fee to the customers for
services rendered by them on behalf of the bank. On the other hand, banks (and not BCs) are permitted to
collect reasonable service charges from the customers for such service in a transparent manner. The
arrangements of banks with the Business Correspondents specify the requirement that the transactions are
accounted for and reflected in the bank's books by end of the day or the next working day, and all
agreements/ contracts with the customer shall clearly specify that the bank is responsible to the customer
for acts of omission and commission of the Business Facilitator/Correspondent.
Hence, banking company is the service provider in the business facilitator model or the business
correspondent model operated by a banking company as per RBI guidelines. The banking company is
liable to pay GST on the entire value of service charge or fee charged to customers whether or not received
via business facilitator or the business correspondent.

Insurance Related Services

1. Services of general insurance business provided under following schemes –
(a) Hut Insurance Scheme;
(b) Cattle Insurance under Swarnajayanti Gram Swarozgar Yojna;
(c) Scheme for Insurance of Tribals;
(d) Janata Personal Accident Policy and Gramin Accident Policy;
(e) Group Personal Accident Policy for Self-Employed Women;
(f) Agricultural Pumpset and Failed Well Insurance;
(g) Premia collected on export credit insurance;
(h) Restructured Weather Based Crop Insurance Scheme (RWCIS), approved by the Government of India and
implemented by the Ministry of Agriculture;
(i) Jan Arogya Bima Policy;
(j) Pradhan Mantri Fasal Bima Yojana (PMFBY);
(k) Pilot Scheme on Seed Crop Insurance;
(l) Central Sector Scheme on Cattle Insurance;
(m) Universal Health Insurance Scheme;
(n) Rashtriya Swasthya Bima Yojana;
(o) Coconut Palm Insurance Scheme;
(p) Pradhan Mantri Suraksha Bima Yojna;
 Exemptions Under GST 301

(q) Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of the
National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disabilities Act, 1999;
(r) Bangla Shasya Bima [Under this scheme, the West Bengal Government will provide crop insurance
coverage to farmers, especially for the Kharif season crops].
[Entry No. 35 of NN. 12/2017 CT (R)]
2. Services of life insurance business provided under following schemes -
(a) Janashree Bima Yojana;
(b) Aam Aadmi Bima Yojana;
(c) Life micro-insurance product as approved by the Insurance Regulatory and Development Authority,
having maximum amount of cover of Rs. 2,00,000/-;
(d) Varishtha Pension Bima Yojana;
(e) Pradhan Mantri Jeevan Jyoti Bima Yojana;
(f) Pradhan Mantri Jan Dhan Yojana;
(g) Pradhan Mantri Vaya Vandan Yojana.
[Entry No. 36 of NN. 12/2017 CT (R)]
3. Services provided to the Central Government, State Government, Union territory under any insurance scheme
for which total premium is paid by the Central Government, State Government, Union territory.
[Entry No. 40 of NN. 12/2017 CT (R)]
4. Services by way of reinsurance of the insurance schemes specified in entries 35 or 36 or 40.
[Entry No. 36A of NN 12/2017 CT (R)]
5. Services by way of collection of contribution under the Atal Pension Yojana.
[Entry No. 37 of NN. 12/2017 CT (R)]
6. Services by way of collection of contribution under any pension scheme of the State Governments.
[Entry No. 38 of NN. 12/2017 CT (R)]
7. Services of life insurance business provided by way of annuity under the National Pension System regulated
by the Pension Fund Regulatory and Development Authority of India under the Pension Fund Regulatory and
Development Authority Act, 2013. [Entry No. 28 of NN. 12/2017 CT (R)]
8. Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force
Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the Group
Insurance Schemes of the Central Government. [Entry No. 29 of NN. 12/2017 CT (R)]
9. Services of life insurance provided or agreed to be provided by the Naval Group Insurance Fund to the
personnel of Coast Guard under the Group Insurance Schemes of the Central Government.
[Entry No. 29A of NN 12/2017 CT (R)]
10. Services of life insurance provided or agreed to be provided by the Central Armed Police Forces (under
Ministry of Home Affairs) Group Insurance Funds to their members under the Group Insurance Schemes of
the concerned Central Armed Police Force. [Entry No. 29B of NN 12/2017 CT (R)]
11. Services by the Employees’ State Insurance Corporation [ESIC] to persons governed under the Employees’
State Insurance Act, 1948. [Entry No. 30 of NN. 12/2017 CT (R)]
12. Services provided by the Insurance Regulatory and Development Authority [IRDA] of India to insurers under
the Insurance Regulatory and Development Authority of India Act, 1999.
[Entry No. 32 of NN. 12/2017 CT (R), omitted by NN 04/2022 CT (R), w.e.f. 18.07.2022]
13. Services by the business facilitator or a business correspondent to an insurance company in a rural area.
[Entry No. 39(c) of NN. 12/2017 CT (R)]
302 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

Miscellaneous Services
1. Services by way of transfer of a going concern, as a whole or an independent part thereof.
[Entry No. 2 of NN. 12/2017 CT (R)]
Analysis :
(i) Transfer of a going concern means transfer of a running business which is capable of being carried on by
the purchaser as an independent business. Such sale of business as a whole is not only a transfer of goods
or immovable property, but it comprises a comprehensive sale of immovable property, goods, transfer of
unexecuted orders, employees, goodwill, etc.
(ii) Since, the transfer of a going concern is not merely a transfer of title in either the immovable property or
goods, therefore, it may amount to service. Hence, to provide exemption to such transactions, this
exemption is provided for.

2. Services provided by-

(a) an arbitral tribunal to –
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as
makes it eligible for exemption from registration under GST; or
(iii) the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity;
(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of
legal services to -
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with an aggregate turnover up to such amount in the preceding financial year as
makes it eligible for exemption from registration under GST; or
(iv) the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity;
(c) a senior advocate by way of legal services to –
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as
makes it eligible for exemption from registration under GST; or
(iii) the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity.
[Entry No. 45 of NN. 12/2017 CT (R)]
Analysis :
(1) As per Sec. 2(1)(a) of the Advocates Act, 1961, Advocate means an advocate entered in any roll under the
provisions of the Advocates Act, 1961.
(2) As per Sec. 2(d) of the Arbitration and Conciliation Act, 1996, Arbitral tribunal means a sole arbitrator or
a panel of arbitrators.
(3) As per Sec. 16 of the Advocates Act, 1961, an advocate may, with his consent, be designated as senior
advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability standing at the
Baror special knowledge or experience in law he is deserving of such distinction. Senior advocates shall, in
the matter of their practice, be subject to such restrictions as the Bar Council of India may, in the interest of
the legal profession, prescribe.
(4) As per clause (zl) under this notification, ‘Legal service’ means any service provided in relation to advice,
consultancy or assistance in any branch of law, in any manner and includes representational services
before any court, tribunal or authority.
(5) Services provided by an arbitral tribunal and legal services provided by partnership firms of advocates or
an individual as an advocate are taxable only if such services are provided to business entities with an
 Exemptions Under GST 303

aggregate turnover exceeding such amount in the preceding financial year as makes it eligible for
exemption from registration under the CGST Act, 2017. However, in respect of these services provided by
such service providers to such business entities, GST is required to be paid on reverse charge basis by such
business entities.
Therefore, in any case, arbitral tribunal or partnership firm of advocates or an individual as an advocate is
not required to get itself registered under GST.
(6) Further, legal services provided by partnership firms of advocates or an individual as an advocate (except
senior advocate) to another advocate or partnership firm of advocates providing legal services are exempt
from GST irrespective of the aggregate turnover of the recipient advocate or partnership firm of advocates
during preceding financial year.
(7) But, legal services provided by senior advocate to another advocate or partnership firm of advocates
providing legal services are not separately exempt from GST. Therefore, legal services provided by senior
advocate to another advocate or partnership firm of advocates providing legal services with an aggregate
turnover exceeding such amount in the preceding financial year as makes it eligible for exemption from
registration under GST are taxable under GST.
(8) Further, any service provided by an arbitral tribunal, or any legal service provided by any individual
advocate including senior advocate or a partnership firm of advocates to the Central Government, State
Government, Union territory, local authority, Governmental Authority or Government Entity shall be
exempt from GST irrespective of the aggregate turnover of the Central Government, State Government,
Union territory, local authority, Governmental Authority or Government Entity in the preceding financial
year.
Illustration 29 :
Mr. Mangal, an advocate, has rendered the following services in the month of April, 2018 :
(a) Representing Mrs. Jain in her divorce case before High Court.
(b) Representing Mr. Surana, an engineer by profession, in relation to his GST liability [Turnover of Mr.
Surana in the financial year 2017-18 was Rs. 21 lakh]
(c) Legal consultancy given to Bansal Associates, a partnership firm of advocates [Turnover of services of
Bansal Associates in the financial year 2017-18 was Rs. 25 lakh]
Examine whether GST is payable on each of the above services assuming Mr. Mangal to be -
(a) an advocate other than a senior advocate.
(b) a senior advocate in terms of section 16 of the Advocates Act, 1961?
Answer :
In background of Entry No. 45 (b) and (c) of NN. 12/2017-CT (R), GST liability of each of the services rendered
by Mangal, are examined hereunder :

S.N. When Mr. Mangal is an advocate other than When Mr. Mangal is a senior advocate
senior advocate
(a) Service of representing Mrs. Jain in her divorce Such service will be exempt even if the same are
case will be exempt as Mrs. Jain is not a rendered by a senior advocate.
business entity.
(b) Since the turnover of Mr. Surana, a business Such services, when provided by senior advocate,
entity, is more than Rs. 20 lakh (i.e., more than will also be liable to GST. Further, here Mr. Surana
exemption limit for registration in GST) in the will be liable to pay GST under RCM.
preceding financial year [2017-18], the same
will be liable to GST. Further, here Mr. Surana
will be liable to pay GST under RCM.
(c) Legal consultancy provided by an advocate to Such services, when provided by a senior
partnership firm of advocates is exempt from advocate, will be liable to GST if the turnover of
GST. the partnership firm (business entity) in the
304 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

preceding financial year 2017- 18 is more than Rs.

20 lakh (i.e. more than exemption limit for
registration in GST). Thus, legal consultancy
provided by Mr. Mangal will be liable to GST if
the turnover of the partnership firm (business
entity) in the financial year 2017- 18 is more than
Rs. 20 lakh Thus, legal consultancy provided by
Mr. Mangal to Bansal Associates, a partnership
firm of advocates, will be liable to GST. Further,
here Bansal Associates will be liable to pay GST
under RCM.

3. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United
News of India. [Entry No. 49 of NN. 12/2017 CT (R)]
4. Services of public libraries by way of lending of books, publications or any other knowledge-enhancing
content or material. [Entry No. 50 of NN. 12/2017 CT (R)]
5. Services by an organiser to any person in respect of a business exhibition held outside India.
[Entry No. 52 of NN. 12/2017 CT (R)]
Analysis :
(i) The organiser is a person who arranges for holding of the exhibition and carries out various activities like
booking of area of land for holding exhibition, approaching various prospective participants for selling
the stall to be established at exhibition, advertising for holding of exhibition, etc.
(ii) The amount received will be the amount charged by the organiser for allotting the stall or space in the
exhibition centre to the participants (i.e. business exhibitors), which is a taxable service.
(iii) But, if such amount is received for holding business exhibition outside India, then, it will be exempt from
GST under this entry.
(iv) The exemption is available to the organiser even if the amount is received in Indian currency, as this
clause does not provide that amount must be received by organiser in foreign currency.
(v) The participants of business exhibition may be from India or outside India.
6. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force,
to its own members by way of reimbursement of charges or share of contribution –
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of GST; or
(c) up to an amount of Rs. 7,500 per month per member for sourcing of goods or services from a third person
for the common use of its members in a housing society or a residential complex.
[Entry No. 77 of NN. 12/2017 CT (R)]
Analysis:
(i) Since, AOP/BOI and its members are two different persons. Therefore, membership fees (i.e.
reimbursement of charges or share of contribution) of any club (AOP/BOI) are chargeable to GST.
However, this entry covers few cases where GST would be exempt on such membership fees (i.e.
reimbursement of charges or share of contribution).
(ii) Membership fee (i.e. reimbursement of charges or share of contribution) charged from members of any
AOP/BOI for carrying out an activity which is already exempt from GST, is also exempt from the levy of
GST (e.g. holding camps to provide health care services which are exempt from GST).
But, if contribution is for carrying out an activity which is taxable, then, GST would be required to be paid
on such membership fees also.
(iii) Service of Resident Welfare Association (RWA) to its own members upto an amount of Rs. 7,500/- per
member per month by way of reimbursement of charges or share of contribution of common expenses (or
maintenance charges) is exempt from GST. But, if the membership fees is more than Rs. 7,500/- (say, Rs.
8,000/-), then, GST would be charged on entire membership fees (i.e. Rs. 8,000/-).
 Exemptions Under GST 305

(iv) Where any club (AOP/BOI) is working just as a pure agent of its members for sourcing of goods or
services from a third person, then, the amount collected by such club (AOP/BOI) from its members will
be excluded from the value of taxable service in terms of Rule 33 of CGST Rules, 2017, subject to
compliance with the specified conditions.
Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association
from its members [Circular No. 109/28/2019 – GST, dated 22.07.2019]
S.N. Issue Clarification
1. A RWA has aggregate turnover of No. If aggregate turnover of an RWA does not exceed Rs. 20
Rs.20 lakh or less in a financial Lakh in a financial year, it shall not be required to take
year. Is it required to take registration and pay GST even if the amount of
registration and pay GST on maintenance charges exceeds Rs. 7,500/- per month per
maintenance charges if the amount member.
of such charges is more than Rs. RWA shall be required to pay GST on monthly
7500/- per month per member? subscription/ contribution charged from its members, only
if such subscription is more than Rs. 7,500/- per month per
member and the annual aggregate turnover of RWA by
way of supplying of services and goods is also Rs. 20 lakhs
or more.
Annual turnover Monthly maintenance Whether
of RWA charge exempt?

More than Rs. 20 More than Rs. 7,500/- No

lakhs Rs. 7,500/- or less Yes

Rs. 20 lakhs or More than Rs. 7,500/- Yes

less Rs. 7,500/- or less Yes

3. Is the RWA entitled to take input RWAs are entitled to take ITC of GST paid by them on
tax credit of GST paid on input and capital goods (generators, water pumps, lawn furniture
services used by it for making etc.), inputs (taps, pipes, other sanitary/hardware fillings
supplies to its members and use etc.) and input services such as repair and maintenance
such ITC for discharge of GST services.
liability on such supplies where the
amount charged for such supplies
is more than Rs. 7,500/- per month
per member?
4. Where a person owns two or more As per general business sense, a person who owns 2 or
flats in the housing society or more residential apartments in a housing society or a
residential complex, whether the residential complex shall normally be a member of the
ceiling of Rs. 7,500/- per month per RWA for each residential apartment owned by him
member on the maintenance for the separately. The ceiling of Rs. 7,500/- per month per member
exemption to be available shall be shall be applied separately for each residential apartment
applied per residential apartment owned by him.
or per person? For example, if a person owns two residential apartments in
a residential complex and pays Rs. 15,000/- per month as
maintenance charges towards maintenance of each
apartment to the RWA (Rs. 7,500/- per month in respect of
each residential apartment), the exemption from GST shall
be available to each apartment.
306 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

5. How should the RWA calculate The exemption from GST on maintenance charges charged
GST payable where the by a RWA from residents is available only if such charges
maintenance charges exceed Rs. do not exceed Rs. 7,500/- per month per member. In case
7,500/- per month per member? Is the charges exceed Rs. 7,500/- per month per member, the
the GST payable only on the entire amount is taxable. For example, if the maintenance
amount exceeding Rs. 7,500/- or on charges are Rs. 9,000/- per month per member, GST @ 18%
the entire amount of maintenance shall be payable on the entire amount of Rs. 9,000/- and not
charges? on [Rs. 9,000 - Rs. 7,500] = Rs. 1,500/- .

7. Services provided by an unincorporated body or a non-profit entity registered under any law for the time
being in force, engaged in,-
(i) activities relating to the welfare of industrial or agricultural labour or farmers; or
(ii) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education,
social welfare, charitable activities and protection of environment, to its own members against
consideration in the form of membership fee upto an amount of one thousand rupees (Rs 1000/-) per
member per year.
[Entry no. 77A of NN 12/2017 CT(R), inserted by NN 14/2018 CT(R) w.e.f. 27.07.2018]
Clarification on whether GST is applicable on reimbursement of electricity charges received by real estate
companies, malls, airport operators, etc. from their lessees / occupants [Circular No. 206/18/2023 – GST,
dated 31.10.2023]

Issue: Applicability of GST on supply of electricity by the real estate companies, malls, airport operators, etc.,
to their lessees or occupants.
Clarification: It is clarified that whenever electricity is being supplied bundled with renting of immovable
property and/or maintenance of premises, it forms a part of composite supply and shall be taxed accordingly.
The principal supply is renting of immovable property and/or maintenance of premise and the supply of
electricity is an ancillary supply. Even if electricity is billed separately, the supplies will constitute a
composite supply and therefore, the rate of the principal supply i.e., GST rate on renting of immovable
property and/or maintenance of premise would be applicable.
However, where the electricity is supplied by the Real Estate Owners, Resident Welfare Associations (RWAs),
Real Estate Developers etc., as a pure agent, it will not form part of value of their supply. Further, where they
charge for electricity on actual basis that is, they charge the same amount for electricity from their lessees or
occupants as charged by the State Electricity Boards or DISCOMs from them, they will be deemed to be acting
as pure agent for this supply.

Illustration 30 : Services Provided by Unincorporated Association

Compute value of taxable services from the following receipts (exclusive of GST) of an unincorporated
association for the financial year 20XX-XY :
1. Collections from members for medical camp Rs. 12 lakhs.
2. Collections from 100 members @ Rs. 8,000 per month per members for maintenance of residential
complex.
3. Collections from 80 members @ Rs. 7,500 per month per members in a commercial complex for
maintenance of commercial complex.
Answer : [Refer Entry No. 77 of NN. 12/2017 CT (R)]
S.N. Particulars Rs.
1. Collection from members for medical camp (since, medical services are exempt, Exempt
hence medical camp by such association is also exempt)
2. Collection from 100 members @ Rs. 8,000 per month per members for maintenance of 96,00,000
a residential complex [Since, amount upto Rs. 7,500 per month per member is
exempt. Hence, entire Rs. 8,000 per month per member is taxable] (100 members x Rs.
8,000 × 12 months) [Circular No. 109/28/2019 - GST, dated 22.07.2019]
 Exemptions Under GST 307

3. Collections from 80 members @ Rs. 7,500 per month per member in a commercial 72,00,000
complex [Since, it is a case of ‘Commercial Complex’. Hence, exemption is not
available. GST liability shall arise] (Rs. 7,500 × 12 month × 80 members)
Taxable Value 1,68,00,000

Illustration 31 : Services Provided by Unincorporated Association

Compute value of taxable service from the following receipts (exclusive of GST) of a Resident Welfare
Association (RWA):
Particulars Rs.
Contribution from 20 residents of Rs. 6,000 each 1,20,000
Contribution from 80 residents of Rs. 8,500 each 6,80,000
Collection towards payment of Electricity bills of residents for 20 residents as per bills 76,000
submitted
Collection in respect of Electricity bill issued in the name of RWA towards electricity 48,000
consumption for common use
Provide brief notes and explanations for your answer.
Answer : [Refer Entry No. 77 of NN. 12/2017 CT (R)]
Computation of Value of Taxable Services of Resident Welfare Association (RWA)
Particulars Reasoning
Contribution from 20 Residents of NIL Contribution upto Rs. 7,500 p.m. per member is exempt. If
Rs. 6,000 each. contribution is above Rs. 7,500 p.m, the entire amount is
taxable.
Contribution from 80 Residents of 6,80,000
Rs. 8,500 each.
Collection towards payment of NIL Expenditure or costs incurred by a RWA as a Pure Agent
Electricity bills of residents for 20 of the members, is excluded from the Value of Taxable
residents as per bills submitted Services in terms of Rule 33 of CGST Rules, 2017. Hence,
members’ electricity bills collections are excluded.
Collection towards payment of NIL
Further, common use electricity bills collections are also
Electricity bills issued in the name
exempt from GST, as these are collected for the provision
of RWA for common use
of carrying out any activity which is exempt from GST
[Entry No. 77 (b)].
Total Value of Taxable Services 6,80,000
Illustration 32 :
The Resident Welfare Association (RWA) of Gokul Dham Society, Mumbai provides the following information
with respect to the various amounts received by it in the month of Oct., 20XX.
SN Particulars (Rs.)
1) Electricity charges levied by State Electricity Board on the RWA in respect of electricity 5,75,000
consumed for common use of lifts and lights in common area.
[Bill was raised in the name of RWA. RWA collected the said charges by apportioning
them equally among 100 families and then, remitted the same to the Board.]
2) Proceeds from sale of entry tickets to a musical performance conducted by the RWA in 50,000
the park of Gokul Dham Society [Where the consideration for admission is not more
than Rs. 500 per person.]
3) Monthly subscription collected from member families (Rs. 8,500 each from 100 families) 8,50,000
4) Electricity charges levied by State Electricity Board on the members of RWA 4,70,000
308 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

[The same was collected from members and remitted to the Board on behalf of member]
5)Other Services to non-members 4,95,000
Compute the value of taxable supply of RWA of Gokul Dham Society for the month of Oct., 20XX.
Notes:
i. Wherever applicable, GST is not included in the receipts of RWA.
ii. Wherever applicable, the time of supply falls in the month of Oct., 20XX.
Answer: Computation of Value of taxable supply and GST liability
SN Particulars (Rs.)
1) Electricity charges levied by State Electricity Board on the RWA in respect of electricity -
consumed for common use of lifts and lights in common area.
[Bill was raised in the name of RWA. RWA collected the said charges by
apportioningthem equally among 100 families and then, remitted the same to the Board.]
[Note 1]
2) Proceeds from sale of entry tickets to a musical performance conducted by the RWA in the -
park of Gokul Dham Society [Where the consideration for admission is not more than Rs.
500 per person.] [Note 2]
3) Monthly subscription collected from member families (Rs. 8,500 each from 100 families) 8,50,000
[Note 3]
4) Electricity charges levied by State Electricity Board on the members of RWA [The same -
was collected from members and remitted to the Board on behalf of member] [Note 4]
5) Other Services to non-members 4,95,000
Value of taxable supply 13,45,000
Notes:
1) In the case of electricity bills issued in the name of RWA, in respect of electricity consumed for common
use of lifts and lights in common area, etc., GST would be exempt as these are collected for the provision
of carrying out any activity which is exempt from GST [Entry No. 77 (b)].
2) Entry to entertainment events where the consideration for admission is not more than Rs. 500 per person
is exempt as per Entry No. 81 of NN 12/2017 - CT (R).
3) If per month per member contribution of any or some members of a RWA exceeds Rs. 7,500 entire
contribution of such members whose per month contribution exceeds Rs. 7,500 would be ineligible for the
exemption under the said notification. GST would then be leviable on the aggregate amount of monthly
contribution of such members.
4) Services provided by a RWA in the name of its members, acting as a “pure agent” of its members, are
excluded from value of taxable supply.
8. Services received from a provider of service located in a non- taxable territory by –
(a) the Central Government, State Government, Union territory, a local authority, a governmental authority
or an individual in relation to any purpose other than commerce, industry or any other business or
profession;
(b) an entity registered under section 12AA of the Income-tax Act, 1961 for the purposes of providing
charitable activities; or
(c) a person located in a non-taxable territory.
Provided that the exemption shall not apply to -
(i) online information and database access or retrieval (OIDAR) services received by persons specified in
item (a) or item (b);
(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs
station of clearance in India received by persons specified in the entry.
[Entry No. 10 of NN. 09/2017 IT (R), as amended by NN 12/2023 – IT (R), w.e.f. 01.10.2023]
9. Supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees. [Entry no.
 Exemptions Under GST 309

10D of NN 09/2017 IT (R), omitted by NN 02/2019 IT (R), w.e.f. 04.02.2019]

10. Services by an intermediary of financial services located in a multi services SEZ with International Financial
Services Centre (IFSC) status to a customer located outside India for international financial services in
currencies other than Indian rupees (INR).
Explanation - For the purposes of this entry, the intermediary of financial services in IFSC is a person,-
(i) who is permitted or recognised as such by the Government of India or any Regulator appointed for
regulation of IFSC; or
(ii) who is treated as a person resident outside India under the Foreign Exchange Management (International
Financial Services Centre) Regulations, 2015; or
(iii) who is registered under the Insurance Regulatory and Development Authority of India (International
Financial Service Centre) Guidelines, 2015 as IFSC Insurance Office; or
(iv) who is permitted as such by Securities and Exchange Board of India (SEBI) under the Securities and
Exchange Board of India (International Financial Services Centres) Guidelines, 2015.
[Entry No. 39A of NN 12/2017 CT (R)]
Example of multi services SEZ: Gift City, Gandhinagar, Gujrat.
Examples of Services: Portfolio Management Services, Asset Management Services, Wealth Management
Services, Global Tax Management Services, etc.
11. Services supplied by an establishment of a person in India to any establishment of that person outside India,
which are treated as establishments of distinct persons in accordance with Explanation 1 in section 8 of the
IGST Act, 2017.
Provided the place of supply of the service is outside India in accordance with section 13 of IGST Act, 2017.
[Entry No. 10F of NN. 09/2017 – IT (R)]
12. Import of services by United Nations or a specified international organisation for official use of the United
Nations or the specified international organisation.
Explanation.- For the purposes of this entry, unless the context otherwise requires, “specified international
organisation” means an international organisation declared by the Central Government in pursuance of section
3 of the United Nations (Privileges and Immunities Act) 1947, to which the provisions of the Schedule to the
said Act apply. [Entry No. 10G of NN. 09/2017 – IT (R)]
13. Import of services by Foreign diplomatic mission or consular post in India, or diplomatic agents or career
consular officers posted therein.
Foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted
therein shall be entitled to exemption from integrated tax leviable on the import of services subject to the
conditions, -
(i) that the foreign diplomatic mission or consular post in India, or diplomatic agents or career consular
officers posted therein, are entitled to exemption from integrated tax, as stipulated in the certificate issued
by the Protocol Division of the Ministry of External Affairs, based on the principle of reciprocity;
(ii) that the services imported are for official purpose of the said foreign diplomatic mission or consular post
or for personal use of the said diplomatic agent or career consular officer or members of his or her
family;
(iii) that in case the Protocol Division of the Ministry of External Affairs, after having issued a certificate to any
foreign diplomatic mission or consular post in India, decides to withdraw the same subsequently, it shall
communicate the withdrawal of such certificate to the foreign diplomatic mission or consular post;
(iv) that the exemption from the whole of the integrated tax granted to the foreign diplomatic mission or
consular post in India for official purpose or for the personal use or use of their family members shall not
be available from the date of withdrawal of such certificate.
[Entry No. 10H of NN. 09/2017 – IT (R)]
14. Services provided by an intermediary when location of both supplier and recipient of goods is outside the
taxable territory.
However, to avail this exemption, following documents shall be maintained for a minimum duration of 5
 310 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

years:
(i) Copy of Bill of Lading
(ii) Copy of executed contract between Supplier/Seller and Receiver/Buyer of goods
(iii) Copy of commission debit note raised by an intermediary service provider in taxable territory from
service recipient located in non-taxable territory
(iv) Copy of certificate of origin issued by service recipient located in non-taxable territory
(v) Declaration letter from an intermediary service provider in taxable territory on company letter head
confirming that commission debit note raised relates to contract when both supplier and receiver of goods
are outside the taxable territory.
[Entry No. 12AA of NN 09/2017 – IT (R)]

Notes :
1. Above services have been exempted from CGST, SGST/UTGST and IGST.
2. A “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership
Act, 2008 shall also be considered as a partnership firm or a firm.

9.5 Other Exemptions

S.N. Description of Services

1. Services imported by unit/developer in SEZ exempt from IGST

All services imported by a unit/developer in the Special Economic Zone (SEZ) for authorised operations are
exempt from the whole of the integrated tax leviable thereon under section 3(7) of the Customs Tariff Act, 1975
read with section 5 of the IGST Act, 2017 [Notification No. 18/2017 IT (R) dated 05.07.2017].

2. IGST Exempted to the extent it is paid on the consideration attributable to royalty and license fee included in
transaction value u/r 10(1)(c) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007
[Notification No. 06/2018 – IT (R), dated 25.01.2018]
Import of services in relation to temporary transfer or permitting the use or enjoyment of any intellectual
property right, to the extent of the aggregate of the Customs duties leviable u/s 3(7) of the Customs Tariff Act,
1975 (i.e. IGST), on the consideration declared u/s 14(1) of the Customs Act, 1962 towards royalties and license
fees included in the transaction value as specified u/r 10(1)(c) of the Customs Valuation (Determination of Value
of Imported Goods) Rules, 2007 on which the appropriate duties of Customs have been paid.
3. Procurement of taxable goods by exporters on payment of GST only @ 0.1% irrespective of actual rate of GST
(NN. 40/2017-Central Tax (Rate) and NN 41/2017 - IT (R), dated 23.10.2017)
The Central Government, on being satisfied that it is necessary in the public interest so to do, on the
recommendations of the Council, hereby exempts the intra-State or inter-State supply of taxable goods by a
registered supplier to a registered recipient for export, from so much of the GST leviable thereon u/s 9 of the
said Act, as is in excess of the amount calculated at the rate of 0.1% [(0.05% CGST + 0.05% SGST) or 0.1% IGST],
[i.e. an exporter who is registered under GST can purchase the taxable goods from a registered supplier on
payment of GST only @ 0.1%, irrespective of actual rate of GST], subject to fulfillment of the following
conditions, namely :
(i) the registered supplier shall supply the goods to the registered recipient on a tax invoice;
(ii) the registered recipient shall export the said goods within a period of 90 days from the date of issue of a
tax invoice by the registered supplier;
(iii) the registered recipient shall indicate the Goods and Services Tax Identification Number (GSTIN) of the
registered supplier and the tax invoice number issued by the registered supplier in respect of the said
goods in the shipping bill or bill of export, as the case may be;
(iv) the registered recipient shall be registered with an Export Promotion Council or a Commodity Board
recognised by the Department of Commerce;
(v) the registered recipient shall place an order on registered supplier for procuring goods at concessional rate
and a copy of the same shall also be provided to the jurisdictional tax officer of the registered supplier;
 Exemptions Under GST 311

(vi) the registered recipient shall move the said goods from place of registered supplier –
(a) directly to the Port, Inland Container Depot, Airport or Land Customs Station from where the said
goods are to be exported; or
(b) directly to a registered warehouse from where the said goods shall move to the Port, Inland
Container Deport, Airport or Land Customs Station from where the said goods are to be exported;
(vii) if the registered recipient intends to aggregate supplies from multiple registered suppliers and then
export, then, the goods from each registered supplier shall move to a registered warehouse and after
aggregation, the registered recipient shall move goods to the Port, Inland Container Deport, Airport or
Land Customs Station from where they shall be exported;
(viii) in case of situation referred to in condition (vii), the registered recipient shall endorse receipt of goods on
the tax invoice and also obtain acknowledgement of receipt of goods in the registered warehouse from
the warehouse operator and the endorsed tax invoice and the acknowledgment of the warehouse operator
shall be provided to the registered supplier as well as to the jurisdictional tax officer of such supplier; and
(ix) when goods have been exported, the registered recipient shall provide copy of shipping bill or bill of
export containing details of Goods and Services Tax Identification Number (GSTIN) and tax invoice of the
registered supplier along with proof of export general manifest or export report having been filed, to the
registered supplier as well as jurisdictional tax officer of such supplier.
Note : The registered supplier shall not be eligible for the above mentioned exemption if the registered recipient
fails to export the said goods within a period of 90 days from the date of issue of tax invoice.
4. Exemption to Central Government’s share of Profit Petroleum from GST [NN 05/2018 – CT (R) and NN 05
2018 – IT (R), dated 25.01.2018]:
The Central Government, on being satisfied that it is necessary in the public interest so to do, on the
recommendations of the Council, has exempted the intra-State and inter-state supply of services by way of grant
of license or lease to explore or mine petroleum crude or natural gas or both, from so much of the GST as is
leviable on the consideration paid to the Central Government in the form of Central Government’s share of
profit petroleum as defined in the contract entered into by the Central Government in this behalf.
5. Clarification regarding applicability of GST on Asian Development Bank (ADB) and International Finance
Corporation (IFC) [Circular No. 83/02/2019- GST, dated 01-01-2019]
1. The ADB Act, 1966 provides that notwithstanding anything to the contrary contained in any other law, the
Bank, its assets, properties, income and its operations and transactions shall be exempt from all the taxation
and from all customs duties. The Bank shall also be exempt from any obligation for payment, withholding
or collection of any tax or duty [Section 5(1) of the ADB Act, 1966 read with Article 56(1) of the schedule
thereto refers]. DEA has already conveyed vide letter No. 1/28/2002-ADB dated 22-01-2004 addressed to
ADB that taxable services provided by ADB are exempted from service tax.
2. Similarly, IFC Act, 1958 also provides that notwithstanding anything to the contrary contained in any other
law, the Corporation, its assets, properties, income and its operations and transactions authorised by the
Agreement, shall be immune from all taxation and from all customs duties. The Corporation shall also be
immune from liability for the collection or payment of any tax or duty [Section 3 (1) of IFC Act, 1958 read
with Article VI, Section 9 (a) of the Schedule thereto refers].
3. CESTAT Mumbai vide final order dated 17-10-2016 in the case of M/s Coastal Gujarat Power Ltd. has held
that when the enactments that honour international agreements specifically immunize the operations of the
service provider from taxability, a law contrary to that in the form of Section 66A of Finance Act, 1994 will
not prevail. With the provider being not only immune from taxation but also absolved of any obligation to
collect and deposit any tax, there is no scope for subjecting the recipient to tax. There is no need for a
separate exemption and existing laws enacted by the sovereign legislature of the Union suffice for the
purpose of giving effect to Agreements.
4. Accordingly, it is clarified that the services provided by IFC and ADB are exempt from GST in terms of
provisions of IFC Act, 1958 and ADB Act. The exemption will be available only to the services provided by
ADB and IFC and not to any entity appointed by or working on behalf of ADB or IFC.
6. Clarification on applicability of GST on payment of Honorarium to the Guest Anchors [Circular No.
177/09/2022 – GST, dated 03.08.2022]
 312 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

1. Sansad TV and other TV channels invite guest anchors for participating in their shows and pays
remuneration to them in the form of honorarium. Some of the guest anchors have requested payment of
GST @ 18% on the honorarium paid to them for such appearances.
2. It is clarified that supply of all goods & services are taxable unless exempt or declared as ‘neither a supply
of goods nor a supply of service’. Services provided by the guest anchors in lieu of honorarium attract GST
liability. However, guest anchors whose aggregate turnover in a financial year does not exceed Rs 20 lakhs
(Rs 10 lakhs in case of special category states) shall not be liable to take registration and hence, will not be
liable to pay GST.

Note: Above services have been exempted from CGST, SGST and IGST (if any) by virtue of notifications issued under
respective Acts.

Clarification on GST applicability on Liquidated Damages, Compensation and Penalty arising out of breach of
contract or other provisions of law – [Circular No. 178/10/2022 - GST, dated 03.08.2022]
4. “Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act” has been
specifically declared to be a supply of service in para 5(e) of Schedule II of CGST Act if the same constitutes a
“supply” within the meaning of Sec. 7 of the Act. The said expression has following three limbs:
a. Agreeing to the obligation to refrain from an act
Example of activities that would be covered by this part of the expression would include non-compete
agreements, where one party agrees not to compete with the other party in a product, service or geographical
area against a consideration paid by the other party.
Another example of such activities would be a builder refraining from constructing more than a certain
number of floors, even though permitted to do so by the municipal authorities, against a compensation paid
by the neighbouring housing project, which wants to protect its sunlight, or an industrial unit refraining from
manufacturing activity during certain hours against an agreed compensation paid by a neighbouring school,
which wants to avoid noise during those hours.
b. Agreeing to the obligation to tolerate an act or a situation
This would include activities such a shopkeeper allowing a hawker to operate from the common pavement in
front of his shop against a monthly payment by the hawker, or an RWA tolerating the use of loud speakers for
early morning prayers by a school located in the colony subject to the school paying an agreed sum to the
RWA as compensation.
c. Agreeing to the obligation to do an act
This would include the case where an industrial unit agrees to install equipment for zero emission/discharge
at the behest of the RWA of a neighbouring residential complex against a consideration paid by such RWA,
even though the emission/discharge from the industrial unit was within permissible limits and there was no
legal obligation upon the individual unit to do so.
5. The description “agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act”
was intended to cover services such as described above. However, over the years doubts have persisted regarding
various transactions being classified under the said description. Some of the important examples of such cases are
Service Tax/GST demands on –
i. Liquidated damages paid for breach of contract;
ii. Compensation given to previous allottees of coal blocks for cancellation of their licenses pursuant to Supreme
Court Order;
iii. Cheque dishonour fine/penalty charged by a power distribution company from the customers;
iv. Penalty paid by a mining company to State Government for unaccounted stock of river bed material;
v. Bond amount recovered from an employee leaving the employment before the agreed period;
vi. Late payment charges collected by any service provider for late payment of bills;
vii. Fixed charges collected by a power generating company from State Electricity Boards (SEBs) or by
SEBs/DISCOMs from individual customer for supply of electricity;
viii. Cancellation charges recovered by railways for cancellation of tickets, etc.
 Exemptions Under GST 313

6. An activity done without the express or implied contractual reciprocity of a consideration would not be an ‘activity
for consideration’. The element of contractual relationship, where one supplies goods or services at the desire of
another, is an essential element of supply.
7. Agreement to do or refrain from an act should not be presumed to exist: Payments such as liquidated damages
for breach of contract, Penalty imposed for violation of laws such as traffic violations, or for violation of pollution
norms or other laws, penalties under the mining act for excess stock found with the mining company, forfeiture of
salary or payment of amount as per the employment bond for leaving the employment before the minimum agreed
period, penalty for cheque dishonor, etc. are not a consideration for tolerating an act or situation. Such amounts are
for preventing breach of contract or non-performance and are thus mere ‘events’ in a contract. Further, such
amounts do not constitute payment (or consideration) for tolerating an act, because there cannot be any contract:
(a) for breach thereof, or (b) for violation of laws, or (c) for holding more stock than permitted under the mining
contract, or (d) for leaving the employment before the agreed minimum period, or (e) for doing something leading
to the dishonour of a cheque. Such payments are merely flow of money and are not a consideration for any supply.
Hence, such activities will not constitute “supply” and will not be chargeable to GST.
8. Compensation for Cancellation of Coal Blocks
 In the year 2014, coal block/mine allocations were cancelled by the Hon’ble Supreme Court. Prior (old) allottee
of mines were given compensation in the year 2016 towards the transfer of their rights/ titles in the land, mine
infrastructure, geological reports, consents, approvals etc. to the new entity (successful bidder) as per the
directions of Hon’ble Supreme Court.
 There was no agreement between the prior allottees of coal blocks and the Government that the previous
allottees shall agree to or tolerate cancellation of the coal blocks allocated to them if the Government pays
compensation to them. No such promise or offer was made by the prior allottees to the Government. The
allottees had no option but to accept the cancellation. Therefore, the compensation paid for cancellation of coal
blocks pursuant to the order of the Supreme Court in the above case was not consideration for any supply of
service and hence, not taxable.
9. Compensation for not collecting toll charges
 In the wake of demonetization, NHAI directed the concessionaires (toll operators) to allow free access of toll
roads to the users from 8.11.2016 to 1.12.2016 for which the loss of toll charge was paid as compensation by
NHAI as per the instructions of Ministry of Road Transportation and Highways. The toll reimbursements were
calculated based on the average monthly collection of toll. A question arose whether the compensation paid to
the concessionaire by project authorities (NHAI) in lieu of suspension of toll collection during the
demonetization period (from 8.11.2016 to 1.12.2016) was taxable as a service by way of agreeing to refrain from
collection of toll from users.
 It has been clarified vide Circular No. 212/2/2019-ST dated 21.05.2019 that the service that is provided by toll
operators is that of access to a road or bridge, toll charges being merely a consideration for that service. During
the period from 8.11.2016 to 1.12.2016, the service of access to a road or bridge continued to be provided without
collection of toll from users. Consideration came from the project authority. The fact that for this period, for the
same service, consideration came from a person other than the actual user of service does not mean that the
service has changed.
10. Late payment fees or surcharge: The facility of accepting late payments with interest or late payment fee, fine or
penalty is a facility granted by supplier naturally bundled with the main supply. Since, it is ancillary to and
naturally bundled with the principal supply such as of electricity, water, telecommunication, cooking gas,
insurance etc., it should be assessed at the same rate as the principal supply.
11. Fixed Capacity charges for Power: The minimum fixed charge or part of it is not a charge for tolerating the act of
not scheduling or consuming the minimum the contracted or available capacity or a minimum threshold. Both the
components of the price, the minimum fixed charges/capacity charges and the variable/energy charges are
charged for sale of electricity and are thus not taxable as electricity is exempt from GST.
12. Cancellation charges: The amount forfeited in the case of non-refundable ticket for air travel or security deposit or
earnest money forfeited in case of the customer failing to avail the travel, tour operator or hotel accommodation
service or such other intended supplies are elements of composite supply and should be assessed at the same rate
as applicable to the service contract, say air transport or tour operator service, or other such services.
 314 Indirect Tax Laws - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

13. It is advised that while the taxability in each case shall depend on facts of that case, the above guidelines may be
followed in determining whether tax on an activity or transaction needs to be paid treating the same as service by
way of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act.
Clarification on Taxability of No Claim Bonus offered by Insurance Companies – [Circular No. 186/18/2022 - GST,
dated 27.12.2022]
Issue 1: Whether the deduction on account of No Claim Bonus allowed by the insurance company from the insurance
premium payable by the insured, can be considered as consideration for the supply provided by the insured to the
insurance company, for agreeing to the obligation to refrain from the act of lodging insurance claim during the previous
year(s)?
Clarification: As per practice prevailing in the insurance sector, the insurance companies deduct No Claim Bonus from
the gross insurance premium amount, when no claim is made by the insured person during the previous insurance
period(s). The customer/insured procures insurance policy to indemnify himself from any loss/ injury as per the terms of
the policy, and is not under any contractual obligation not to claim insurance claim during any period covered under
the policy, in lieu of No Claim Bonus.
It is, therefore, clarified that there is no supply provided by the insured to the insurance company in form of agreeing to
the obligation to refrain from the act of lodging insurance claim during the previous year(s) and No Claim Bonus
cannot be considered as a consideration for any supply provided by the insured to the insurance company.
Issue 2: Whether No Claim Bonus provided by the insurance company to the insured can be considered as an admissible
discount for the purpose of determination of value of supply of insurance service provided by the insurance company to
the insured?
Clarification: As per section 15(3)(a) of the CGST Act, value of supply shall not include any discount which is given
before or at the time of supply if such discount has been duly recorded in the invoice issued in respect of such supply.
The insurance companies make the disclosure of the fact of availability of discount in form of No Claim Bonus, subject
to certain conditions, to the insured in the insurance policy document itself and also provide the details of the no claim
Bonus in the invoices also. The pre-disclosure of NCB amount in the policy documents and specific mention of the
discount in form of No Claim Bonus in the invoice is in consonance with the conditions laid down for deduction of
discount from the value of supply under section 15(3)(a) of the CGST Act.
It is, therefore, clarified that No Claim Bonus (NCB) is a permissible deduction under section 15(3)(a) of the CGST Act
for the purpose of calculation of value of supply of the insurance services provided by the insurance company to the
insured. Accordingly, where the deduction on account of No claim bonus is provided in the invoice issued by the insurer
to the insured, GST shall be leviable on actual insurance premium amount, payable by the policy holders to the insurer,
after deduction of No Claim Bonus mentioned on the invoice.