Enhancements have been incorporated on the e-waybill portal to provide better user experience to taxpayers
Changes in e-invoice validations
e-invoice is implemented from 1st Oct 2020 for taxpayers having turnover above ₹ 500 crores and the same has been reduced to ₹ 100 crores from 1st Jan 2021 and from 1st April 2021 to ₹ 50 crores.
Following are the changes announced in e-invoice validations during June 2021
- When SEZ Developer is Supplier, only IGST is applicable irrespective of Supplier State code and POS Code.
- In these cases, no need to set ‘IGSTonIntra’ flag to ‘Y’ (which would have mandated RCM = ‘Y’) since this is not applicable.
It has been rolled out in a very swift manner and without any hiccups.
Government grants further extension in timelines of compliances. Also announces tax exemption for expenditure on Covid treatment and ex-gratia received on death due to Covid
A. Tax exemption
- Many taxpayers have received financial help from their employers and well-wishers for meeting their expenses incurred for treatment of Covid-19. In order to ensure that no income tax liability arises on this account, it has been decided to provide income-tax exemption to the amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years.
- Unfortunately, certain taxpayers have lost their life due to Covid-19. Employers and well-wishers of such taxpayers had extended financial assistance to their family members so that they could cope with the difficulties arisen due to the sudden loss of the earning member of their family. In order to provide relief to the family members of such taxpayer, it has been decided to provide income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.
Necessary legislative amendments for the above decisions shall be proposed in due course of time.
B. Extension of Timelines
In view of the impact of the Covid-19 pandemic, taxpayers are facing inconvenience in meeting certain tax compliances and also in filing response to various notices. In order to ease the compliance burden of taxpayers during this difficult time, reliefs are being provided through Notifications nos. 74/2021 & 75/2021 dated 25th June, 2021 Circular no. 12/2021 dated 25th June, 2021. These reliefs are:
- Objections to Dispute Resolution Panel (DRP) and Assessing Officer under section 144C of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for which the last date of filing under that section is 1st June, 2021 or thereafter, may be filed within the time provided in that section or by 31st August, 2021, whichever is later.
- The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, required to be furnished on or before 31st May, 2021 under Rule 31A of the Income-tax Rules,1962 (hereinafter referred to as “the Rules”), as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021.
- The Certificate of Tax Deducted at Source in Form No.16, required to be furnished to the employee by 15th June, 2021 under Rule 31 of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021.
- The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64D for the Previous Year 2020-21, required to be furnished on or before 15th June, 2021 under Rule 12CB of the Rules, as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021.
- The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64C for the Previous Year 2020-21, required to be furnished on or before 30th June, 2021 under Rule 12CB of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021.
- The application under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No. 10A/ Form No.10AB, for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/ Research Associations etc., required to be made on or before 30th June, 2021, may be made on or before 31st August, 2021.
- The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, for which the last date of such compliance falls between 1st April, 2021 to 29th September, 2021 (both days inclusive), may be completed on or before 30th September, 2021.
- The Quarterly Statement in Form No. 15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021, required to be furnished on or before 15th July, 2021 under Rule 37 BB of the Rules, may be furnished on or before 31st July, 2021.
- The Equalization Levy Statement in Form No. 1 for the Financial Year 2020-21, which is required to be filed on or before 30th June, 2021, may be furnished on or before 31st July, 2021.
- The Annual Statement required to be furnished under sub-section (5) of section 9A of the Act by the eligible investment fund in Form No. 3CEK for the Financial Year 2020-21, which is required to be filed on or before 29th June, 2021, may be furnished on or before 31st July, 2021.
- Uploading of the declarations received from recipients in Form No. 15G/15H during the quarter ending 30th June, 2021, which is required to be uploaded on or before 15th July, 2021, may be uploaded by 31st August,2021.
- Exercising of option to withdraw pending application (filed before the erstwhile Income Tax Settlement Commission) under sub-section (1) of Section 245M of the Act in Form No. 34BB, which is required to be exercised on or before 27th June, 2021, may be exercised on or before 31st July, 2021.
- Last date of linkage of Aadhaar with PAN under section 139AA of the Act, which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
- Last date of payment of amount under Vivad se Vishwas(without additional amount) which was earlier extended to 30th June, 2021 is further extended to 31st August, 2021.
- Last date of payment of amount under Vivad se Vishwas (with additional amount) has been notified as 31st October, 2021.
- Time Limit for passing assessment order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
- Time Limit for passing penalty order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
- Time Limit for processing Equalisation Levy returns which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
Compliance Check Functionality for Section 206AB & 206CCA of Income-tax Act 1961
Compliance Check Functionality for Section 206AB & 206CCA of Income-tax Act 1961
Section 206AB and 206CCA inserted in the Income-tax Act,1961 (effective from 1st July
2021), imposed higher TDSITCS rate on the “Specified Persons’ defined as under,
- For the purposes of this section ‘ specified person” means a person who has not filed
the retums of income for both of the two assessment years relevant to the two previous
years immediately prior to the previous year in which tax is required to be collected,
for which the time limit of filing retum of income under sub-section (1) of section 139
has expired; and the aggregate of tax deducted at source and tax collected at source
in his case is rupees fifty thousand or more in each of these two previous years.
Provided that the specified person shall not include a non-resident who does not have
a permanent establishment in India.
Explanation.-For the purposes of this sub-section, the expression ‘permanent
establishment” includes a fixed place of business through which the business of the
enterprise is wholly or partly carried on.”
2. To facilitate Tax Deductors and Collectors in identification of Specified Persons as
defined in sections 206AB and 206CCA, the Central Board of Direct Taxes (“CBDT”), in
exercise of powers conferred under section 138(1 )(a)(i) of Income-tax Act, 1961 (Act), has
issued Order via F.No. 225/671202111TA.1I dated 21 .06.2021 , directing that Director General
of Income-tax (Systems), New Delhi shall be the specified income-tax authority for furnishing
information to the “Tax DeductorlTax Collector”, having registered in the reporting portal of
the Project Insight through valid TAN, to identify the ‘Specified Persons’ for the purposes of
section 206AB and 206CCA of the Act through the functionality “Compliance Check for
Section 206AB& 206CCA”.
3. Income Tax Department has released a new functionality ·Compliance Check for
Section 206AB & 206CCAn to facilitate tax deductors/collectors to verify if a person is a
“Specified Person” as per section 206AB & 206CCA. This functionality is made available
through (https:llreport.insight.gov.in) of Income-tax Department. Kindly refer to CBDT Circular
4. The following procedure is laid down for sharing of information with tax
a ) Registration: Tax Deductors and Collectors can register on the Reporting
Portal by logging in to e-filing portal (http://www.incometax.gov.inl) using e-filing
login credential of TAN and clicking on the link “Reporting Portal” which is available
under “Pending Actions” Tab of the e-filing Portal. After being redirected to the
Reporting Portal, the tax deductor/collector needs to select Compliance Check (Tax
Deductor & Collector) under Form Type. The details of the principal officer also need
to be provided by clicking on “Add Principal Officer” button. The principal officer is
the authorized person of the tax deductor/collector to use the Compliance Check
functionality on reporting portal. After submission of registration request, email
notification will be shared with the Principal Officer along with ITDREIN details and
b) Accessing the Compliance Check functionality: Principal OffICers of the
entities (Tax Deductors & Collectors) which are registered with the Reporting Portal
through TAN shall be able to use the functionality after login into the Reporting Portal
using their credentials. After successfully logging in, link to the functionality
“Compliance Check for Section 206AB & 206CCA” will appear on the home page of
the Reporting Portal
c) Using “PAN Search” mode: Under the “Compliance Check for Section
206AB & 206CCA” page, “PAN Search” tab may be selected to access the
functionality in PAN Search mode. In this mode single valid PAN along with captcha
can be entered at a time and output will be available with following fields,
• Financial Year: Current Financial Year
• PAN: As provided in the input.
• Name: Masked name of the Person (as per PAN).
• PAN Allotment date: Date of allotment of PAN.
• PAN-Aadhaar Link Status: Status of PAN-Aadhaar linking for individual
PAN holders as on date. The response options are Linked (PAN and Aadhaar
are linked), Not Linked (PAN & Aadhaar are not linked), Exempt (PAN is
exempted from PAN-Aadhaar linking requirements as per Department of
Revenue Notification No. 37/2017 dated 11th May 2017) or Not-Applicable
(PAN belongs to non-individual person).
• Specified Person uts 206AB & 206CCA: The response options are Yes
(PAN is a specified person as per section 206ABI206CCA as on date) or No
(PAN is not a specified person as per section 206AB/206CCA as on date).
Output will also provide the date on which the “Specified Person” status as per
section 206AB and 206CCA is determined.
d) Using “Bulk Search” mode: Under the “Compliance Check for Section
206AB & 206CCA” functionality page, “Bulk Search” tab may be aeIected to access
the functionality in Bulk Search mode. This mode involves following steps:
i) Preparing request (Input) file containing PANs: Under the “Bulk Search”
page, CSV Template to enter PANs details may be downloaded by clicking on
“Download CSV template” button. PANs for which “Specified Person” status
is required may be entered in the downloaded CSV template. The current limit
in the number of PANs in a single file is 10,000.
ii) Uploading the input CSV file: Input CSV file may be uploaded by clicking on
Upload CSV button. Uploaded file will start reflecting with Uploaded status.
iii) Downloading the output CSV file: After processing, CSV file containing
“Specified Person” status as per section 20SAB & 206CCA of the entered PANs
will be available for download and “Status’ will change to Available. Output
CSV file will contain PAN, Masked Name, Specified Person Status as per
section 20SAS & 206CCA, PAN-Aadhar Link status and other details as
mentioned in paragraph c) above. After downloading of the file, the status will
change to Downloaded. The download link will expire and status will change to
Expired after specified time (presently 24 hours of availability of the file).
5. For any further assistance, Tax Deductors & Collectors can refer to Quick Reference
Guide on Compliance Check for Section 206AS & 206CCA and Frequently Asked Questions
(FAQ) available under “Resources’ section of Reporting Portal. They can also navigate to the
“Help” section of Reporting Portal for submitting query or to get a call back from Customer
Care Team of Income-tax Department. Customer Care Team of Income-tax Department can
also be reached by calling on its Toll Free number 1800 1034215 for any assistance.
Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- Central Tax dated 21st March, 2020 – Reg.
Circular Number 156/12/2021-GST dated 21st June 2021
- Notification No. 14/2020-Central Tax, dated 21st March 2020 had been issued which
requires Dynamic QR Code on B2C invoice issued by taxpayers having aggregate turnover
more than 500 crore rupees, w.e.f. 01.12.2020. Further, vide notification No. 06/2021-Central
Tax, dated 30th March 2021, penalty has been waived for non-compliance of the provisions of
notification No.14/2020 – Central Tax for the period from 01st December, 2020 to 30th June,
2021, subject to the condition that the said person complies with the provisions of the said
notification from 1st July, 2021. Further, various issues on Dynamic QR Code have been
clarified vide Circular No. 146/2/2021-GST, dated 23.02.2021.
2. Various references have been received from trade and industry seeking clarification on
applicability of Dynamic Quick Response (QR) Code on B2C (Registered person to Customer)
invoices and compliance of notification 14/2020-Central Tax, dated 21st March, 2020 as
amended. The issues have been examined and in order to ensure uniformity in the
implementation of the provisions of the law across the field formations, the Board, in exercise
of its powers conferred under section 168(1) of the CGST Act, 2017, hereby clarifies the issues
Question 1 . Whether Dynamic QR Code is to be provided on an invoice, issued to a person, who has obtained a Unique Identity Number as per the provisions of Sub-Section 9 of Section 25 of CGST Act 2017?
Answer : Any person, who has obtained a Unique Identity Number (UIN) as per the provisions of Sub-Section 9 of Section 25 of CGST Act 2017, is not a “registered person” as per the definition of registered person provided in section 2(94) of the CGST Act 2017. Therefore, any invoice, issued to such person having a UIN, shall be considered as invoice issued for a B2C supply and shall be required to comply with the requirement of Dynamic QR Code.
Question 2: UPI ID is linked to the bank account of the payee/ person collecting money. Whether bank account and IFSC details also need to be provided separately in the Dynamic QR Code along with UPI ID?
Answer : Given that UPI ID is linked to a specific bank account of the payee/ person collecting money, separate details of bank account and IFSC may not be provided in the Dynamic QR Code.
Question 3: In cases where the payment is collected by some person other than the supplier (ECO or any other person authorized by the supplier on his/ her behalf), whether in such cases, in place of UPI ID of the supplier, the UPI ID of such person, who is authorized to collect the payment on behalf of the supplier, may be provided?
Answer : Yes. In such cases where the payment is collected by some person, authorized by the supplier on his/ her behalf, the UPI ID of such person may be provided in the Dynamic QR Code, instead of UPI ID of the supplier.
Question 4: In cases, where receiver of services is located outside India, and payment is being received by the supplier of services in foreign exchange, through RBI approved modes of payment, but as per provisions of the IGST Act
2017, the place of supply of such services is in India, then such supply of services is not considered as export of
services as per the IGST Act 2017; whether in such cases, the Dynamic QR Code is required on the invoice issued, for such supply of services, to such recipient located outside India?
Answer : No. Wherever an invoice is issued to a recipient located outside India, for supply of services, for which the place of supply is in India, as per the provisions of IGST Act 2017, and the payment is received by the supplier in foreign currency, through RBI approved mediums, such invoice may be issued without having a Dynamic QR Code, as such dynamic QR code cannot be used by the recipient located outside India for making payment to the supplier.
Question 5 : In some instances of retail sales over the counter, the payment from the customer in received on the payment counter by displaying dynamic QR code on digital display, whereas the invoice, along with invoice number, is
generated on the processing system being used by supplier/ merchant after receiving the payment. In such cases, it
may not be possible for the merchant/ supplier to provide details of invoice number in the dynamic QR code
displayed to the customer on payment counter. However, each transaction i.e. receipt of payment from a customer is
having a unique Order ID/ sales reference number, which is linked with the invoice for the said transaction. Whether in such cases, the order ID/reference number of such transaction can be provided in the dynamic QR code displayed digitally, instead of invoice number.
Answer : In such cases, where the invoice number is not available at the time of digital display of dynamic QR code in case of over the counter sales and the invoice number and invoices are generated after receipt of payment, the unique order ID/unique sales reference number, which is uniquely linked to the invoice issued for the said transaction, may be provided in the Dynamic QR Code for digital display, as long as the details of such unique order ID/ sales reference number linkage with the invoice are available on the processing system of the merchant/ supplier and the cross reference of such payment along with unique order ID/ sales reference number are also provided on the invoice.
Question 6 : When part-payment has already been received by the merchant/ supplier, either in advance or by adjustment (e.g. using a voucher, discount coupon etc), before the dynamic QR Code is generated, what amount should be provided in the Dynamic QR Code for “invoice value”?
Answer : The purpose of dynamic QR Code is to enable the recipient/ customer to scan and pay the amount to be paid to the merchant/supplier in respect of the said supply. When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/discount coupon etc., then the dynamic QR code may provide only the remaining amount payable by the customer/recipient against “invoice value”. The details of total invoice value, along with details/ cross reference of the part payment/ advance/ adjustment done, and the remaining amount to be paid, should be provided on the invoice.
3. Circular No. 146/2/2021-GST, dated 23.02.2021 stands modified to this extent.
Clarification regarding applicability of GST on supply of food in Anganwadis and Schools
Circular Number 149/05/2021-GST dated 17th June 2021
- Representations have been received seeking clarification regarding
applicability of GST on the issues as to whether serving of food in schools under
Mid-Day Meals Scheme would be exempt if such supplies are funded by
government grants and/or corporate donations. The issue was examined by GST
Council in its 43rd meeting held on 28th May, 2021.
- Entry 66 clause (b)(ii) of notification No. 12/2017-Central Tax (Rate) dated
28th June, 2017, 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.
- 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 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, aganwadi is covered by the definition of educational.
institution (as pre-school_.
- 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 aganwadi. Hence,
serving of food to anganwadi shall also be covered by said exemption, whether
sponsored by government or through donation from corporates
Clarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination)
Circular Number 151/07/2021-GST dated 17th June 2021
1.Certain representations have been received seeking clarification in respect of
taxability of various services supplied by Centre and State Boards such as National
Board of Examination (NBE). These services 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. The issue was examined by GST Council in its 43rd meeting held on 28th
- 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.
- According to explanation 3(iv) of the notification No. 12/ 2017 CTR, “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 notification No. 12/ 2017- Central Tax (Rate) dated
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)-
3.3 Educational institutions are defined at 2(y) of the said notification as follows-
“(y) educational institution” means an institution providing services by way of, –
(i) pre-school education and education up to higher secondary school or
(ii) education as a part of a curriculum for obtaining a qualification recognized by
any law for the time being in force;
(iii) education as a part of an approved vocational education course;”;
Further, clause (iv) of Explanation of said notification reads as below:
“(iv) 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”
- Taking into account the above, the GST Council has recommended, to clarify
(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 S. No. 66 (aa) of notif No. 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 S. No. 66 (b) (iv) of notif No. 12/2017-
(iii) 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.
Clarification regarding rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basis-
Circular Number 152/08/2021-GS dated 17th June 2021
- Reference has been received by the Board for a clarification whether services
supplied to a Government Entity by way of construction such as of “a ropeway” are
eligible for concessional rate of 12% GST under entry No. 3 (vi) of Notification No.
11/2017- CT (R) dt. 28.06.2017. On the recommendation of the GST Council, this issue
is clarified as below.
- According to entry No. 3(vi) of notification No. 11/2017-CT (R) dated
28.06.2017, GST rate of 12% is applicable, inter alia, on-
“(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central
Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id),
(ie) and (if) above) provided to the Central Government, State Government, Union Territory,
a local authority a Governmental Authority or a Government Entity, by way of construction,
erection, commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of –
(a) a civil structure or any other original works meant predominantly for use other
than for commerce, industry, or any other business or profession; “
3. Thus, said entry No 3 (vi) does not apply to any works contract that is meant
for the purposes of commerce, industry, business of profession, even if such service
is provided to the Central Government, State Government, Union Territory, a local
authority a Governmental Authority or a Government Entity. The doubt seems to
have arisen in the instant cases as Explanation to the said entry states, the term
‘business’ shall not include any activity or transaction undertaken by the Central
Government, a State Government or any local authority in which they are engaged
as public authorities. However, this explanation does not apply to Governmental
Authority or Government Entity, as defined in clause (ix) and (x) of the explanation
to said notification. Further, civil constructions, such as rope way for tourism
development shall not be covered by said entry 3(vi) not being a structure that is
meant predominantly for purposes other than business. While road, bridge,
terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification,
structures like ropeway are not covered by these entries too. Therefore, works
contract service provided by way of construction such as of rope way shall fall under
entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%.
GST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDS –reg
Circular Number 153/09/2021-GST dated 17th June 2021
- Certain representations have been received seeking clarification whether
composite supply of service by way of milling of wheat into wheat flour, alongwith
fortification, 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
Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and also as regards the
rate of GST on such milling, if it does not fall in said entry No. 3A. The issue has been
examined by GST Council in its 43rd meeting held on 28th May, 2021.
- Entry at Sl. No. 3A of Notification No. 12/2017-Central Tax (Rate) dated
28.06.2017 exempts “composite supply of goods and services in which the value of supply of
goods constitutes not more than 25 per cent of the value of the said composite supply provided
to the Central Government, State Government or Union territory or local authority or a
Governmental authority or a Government Entity 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. As per the recommendation of the GST Council the issue is clarified as below.
3.1 Public Distribution specifically figures at entry 28 of the 11th Schedule to the
constitution, which lists 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.
3.2 In case the supply of service by way of milling of wheat into flour or of paddy
into rice, is not eligible for exemption under Sl. No. 3 A of Notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such
a composite supply exceeds 25%, then the applicable GST rate would be 5% if such
composite supply is provided to a registered person, being a job work service (entry
No. 26 of notification No. 11/2017- Central Tax (Rate) dated 28.06.2017). Combined
reading of the definition of job-work [section 2(68), 2(94), 22, 24, 25 and section 51]
makes it clear that a person registered only for the purpose of deduction of tax under
section 51 of the CGST Act is also a registered person for the purposes of the said entry
No. 26, and thus said supply to such person is also entitled for 5% rate.
GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by them
Circular No.154/10/2021-GST dated 17th June 2021
- Certain representations have been received requesting for clarification
regarding applicability of GST on supply of service by State Govt. to their
undertakings or PSUs by way of guaranteeing loans. The issue was examined by
GST Council in its 43rd meeting held on 28th May, 2021.
- Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017
exempts “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.”
- Accordingly, as recommended by the Council, it is re-iterated that
guaranteeing of loans by Central or State Government for their undertaking or PSU
is specifically exempt under said entry No. 34A