FAQ for Government Services dated 18-08-2017
General FAQ on GST – GST Frequently Asked Questions (FAQs)
GST
Question 1 : Are all services provided by the Government or local authority exempted from payment of tax?
\nAnswer : No, all services provided by the Government or a local authority are not exempt from tax. As for instance, services, namely, (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of an airport or a port; (iii) transport of goods or passengers; or (iv) any service, other than services covered under (i) to (iii) above, provided to business entities are not exempt and that these services are liable to tax.
\nThat said, most of the services provided by the Central Government, State Government, Union Territory or local authority are exempt from tax. These includ<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n (iii) services in relation to an aircraft or a vessel, inside or outside the precincts of an airport or a port, the service recipients are required to pay the tax under reverse charge mechanism. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n inate to him who exercise the executive powers of the State vested in the Governor and in the name of the Governor. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Act are not qualified as local authorities for the purposes of the GST Acts. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n he State Government and Union Territory; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Board of India. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n scope of agency services provided by the Department of Posts mentioned in the Notification No. 12\/2017-Central Tax (Rate), dated 28-6-2017? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n social development. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ectricity. (xv) Non-conventional energy sources. (xvi) Poverty alleviation programme. (xvii) Education, including primary and secondary schools. (xviii) Technical training and vocational education. (xix) Adult and non-formal education. (xx) Libraries. (xxi) Cultural activities. (xxii) Markets and fairs. (xxiii) Health and sanitation, including hospitals, primary health centres and dispensaries. (xxiv) Family welfare. (xxv) Women and child development. (xxvi) Social welfare, including welfare of the handicapped and mentally retarded. (xxvii) Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. (xxviii) Public distribution system. (xxix) Maintenance of community assets. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n upplier for non performance of contract is exempted from tax. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e are subject to tax? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n port of goods or passengers and (iv) services by way of renting of immovable property. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n On the other hand, let us take the example of a governmental authority awarding the work of maintenance of street lights in a Municipal area to an agency which involves apart from maintenance, replacement of defunct lights and other spares. In this case, the scope of the service involves maintenance work and supply of goods, which falls under the works contract services. The exemption is provided to services involves only supply of services and not for works contract services. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n uthority; or (c) Governmental agencies; or (d) such persons or category of persons as may be notified by the Government on the recommendations of the Council, to deduct tax at the rate of one per cent on account of CGST and one per cent on account of SGST from the payment made or credited to the supplier where the total value of the supply under a contract exceeds two lakh and fifty thousand rupees (excluding tax payable under the GST Acts). The deductor shall remit the deducted amount to the Government and is also required to furnish a certificate to the deductee by mentioning the details of the amount deducted and payment of such deducted amount. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ing assigned the rights to use the natural resources, the licensee companies are required to pay consideration in the form of annual license fee, lease charges, royalty, etc. to the Government. The activity of assignment of rights to use natural resources is treated as supply of services and the licensee is required to pay tax on the amount of consideration paid in the form of royalty or any other form under reverse charge mechanism. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" FAQ for Government Services dated 18-08-2017General FAQ on GST – GST Frequently Asked Questions (FAQs)GSTQuestion 1 : Are all services provided by the Government or local authority exempted from payment of tax? Answer : No, all services provided by the Government or a local authority are not exempt from tax. As for instance, services, namely, (i) services … Continue reading “FAQ for Government Services dated 18-08-2017”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-15974","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15974"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15974\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nQuestion 3 : What is the meaning of 'Government'?
\nAnswer : As per section 2(53) of the CGST Act, 2017, 'Government' means the Central Government. As per clause (23) of section 3 of the General Clauses Act, 1897 the 'Government' includes both the Central Government and any State Government. As per clause (8) of section 3 of the said Act, the 'Central Government', in relation to anything done or to be done after the commencement of the Constitution, means the President. As per Article 53 of the Constitution, the executive power of the Union shall be vested in the President and shall be exercised by him either directly or indirectly through officers sub-ordinate to him in accordance with the Constitution. Further, in terms of Article 77 of the Constitution, all executive actions of th<\/p>\n
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\nQuestion 4 : Who is a local authority?
\nAnswer : Local authority is defined in clause (69) of section 2 of the CGST Act, 2017 and means the following :
\n * “Panchayat” as defined in clause (d) of article 243 of the Constitution;
\n * “Municipality” as defined in clause (e) of article 243P of the Constitution;
\n * a Municipal Committee, a , a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund;
\n * Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
\n * Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
\n * Development Board constituted under article 371 of the Constitution; or
\n * Regional Council constituted under article 371A of the Constitution;
\nQuestion 5 : A<\/p>\n
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\nQuestion 6 : Would a statutory body, corporation or an authority constituted under an Act passed by the Parliament or any of the State Legislatures be regarded as 'Government' or “local authority” for the purposes of the GST Acts?
\nAnswer : A statutory body, corporation or an authority created by the Parliament or a State Legislature is neither 'Government' nor a 'local authority'. Such statutory bodies, corporations or authorities are normally created by the Parliament or a State Legislature in exercise of the powers conferred under article 53(3)(b) and article 154(2)(b) of the Constitution respectively. It is a settled position of law (Agarwal v. Hindustan Steel – AIR 1970 Supreme Court 1150) that the manpower of such statutory authorities or bodies do not become officers sub-ordinate to the President under article 53(1) of the Constitution and similarly to the Governor under article 154(1). Such<\/p>\n
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\n (b) services in relation to a vessel or an aircraft inside or outside the precincts of a port or an airport;
\n (c) services of transport of goods and\/or passengers.
\nQuestion 8 : What are the transport services provided by the Government or local authorities exempt from tax?
\nAnswer : Transport services provided by the Government to passengers by – (i) railways in a class other than – (a) first class; or (b) an air-conditioned coach; (ii) metro, monorail or tramway; (iii) inland waterways; (iv) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and (v) metered cabs or auto rickshaws (including E-rickshaws) are exempt from tax.
\nQuestion 9 : Are various corporations formed under the Central Acts or State Acts or various government companies registered under the Companies Act, 1956\/2013 or autonomous institutions set up by special Acts covered under the definiti<\/p>\n
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\nQuestion 11 : Will the services provided by Police or security agencies of Government to PSUs or corporate entities or sports events held by private entities be taxable?
\nAnswer : Yes. Services provided by Police or security agencies of Government to PSU\/private business entities are not exempt from GST. Such services are taxable supplies and the recipients are required to pay the tax under reverse charge mechanism on the amount of consideration paid to Government for such supply of services.
\nIllustration : 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 the cricket match. The Commissioner of Police arranges the required security for a consideration. In this case, services of providing security by the police personnel are not exempt. As the services are provided by Government, Karnataka Cricket Association is liable to pay the<\/p>\n
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\nAnswer : The Department of Posts also provides services like distribution of mutual funds, bonds, passport applications, collection of telephone and electricity bills on commission basis. These services are in the nature of intermediary and generally called agency services. In these cases, the Department of Posts is liable to pay tax without application of reverse charge.
\nQuestion 14 : Would services received by Government, a local authority, a governmental authority from a provider of service located outside India be taxable?
\nAnswer : No tax is payable on the services received by the Government\/local authority\/governmental authority from a provider of service located outside India. However, the exemption is applicable to only those services which are received for the purpose other than commerce, industry or any other business or <\/p>\n
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\n (d) Roads and bridges.
\n (e) Water supply for domestic, industrial and commercial purposes.
\n (f) Public health, sanitation conservancy and solid waste management.
\n (g) Fire services.
\n (h) Urban forestry, protection of the environment and promotion of ecological aspects.
\n (i) Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.
\n (j) Slum improvement and upgradation.
\n (k) Urban poverty alleviation.
\n (l) Provision of urban amenities and facilities such as parks, gardens, playgrounds.
\n (m) Promotion of cultural, educational and aesthetic aspects.
\n (n) Burials and burial grounds; cremations, cremation grounds; and electric crematoriums.
\n (o) Cattle pounds; prevention of cruelty to animals.
\n (p) Vital statistics including registration of births and deaths.
\n (q) Public amenities including street lighting, parking lots, bus<\/p>\n
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\nQuestion 18 : What is the significance of services provided by Government or a 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 Government or the local authority?
\nAn<\/p>\n
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\nIllustration : Public Works Department of Karnataka entered into an agreement with M\/s. ABC, a construction company for construction of office complex for certain amount of consideration. In the agreement dated 10-7-2017, it was agreed by both the parties that M\/s. ABC shall complete the construction work and handover the project on or before 31-12-2017. It was further agreed that any breach of the terms of contract by either party would give right to the other party to claim for damages or penalty. Assuming that M\/s. ABC does not complete the construction and handover the project by the specified date i.e., on or before 31-12-2017. As per the contract, the department asks for damages\/penalty from M\/s. ABC and threatened to go to the court if not paid. Assuming that M\/s. ABC has paid an amount of ₹ 10,00,000\/- to the department for non performance of contract. Such amount paid to department is exempted from payme<\/p>\n
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\nAnswer : The expression “special category States” provided in Explanation (iii) to section 22 of the CGST Act, shall mean the States as specified in sub-clause (g) of clause (4) of Article 279A of the Constitution. As per the said clause, the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand have been given the status of special category States for the purpose of GST Acts. Notification No. 12\/2017-Central Tax (Rate), dated 28-6-2017 (Sl. No. 7 of the Table) provides for exemption from payment of tax in respect of services provided to a business entity located in a special category State with a turnover up to ₹ 10 lakh rupees. However, this exemption is not be applicable to (a) services – (i) by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; (ii) in relation to a<\/p>\n
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\nQuestion 23 : What is reverse charge in GST?
\nAnswer : As per 2(98) of the CGST Act, 2017, ''reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9 of the CGST Act, 2017, or under sub-section (3) or sub-section (4) of section 5 of the IGST Act, 2017.
\nQuestion 24 : Whether reverse charge is applicable to services provided by Government or local authorities?
\nAnswer : Yes, reverse charge is applicable in respect of services provided by Government or local authorities to any person whose turnover exceeds ₹ 20 lakhs (Rs. 10 lakhs for Special Category States) excluding the following services :
\n (i) renting of immovable property;
\n (ii) services by the Department of Posts by way of speed post, express parcel <\/p>\n
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\nQuestion 26 : Would services in relation to supply of motor vehicles to Government be taxable?
\nAnswer : Supply of a motor vehicle meant to carry more than twelve passengers by way of giving on hire to a state transport undertaking is exempted from tax. The exemption is applicable to services provided to state transport undertaking and not to other departments of Government or local authority. Generally, such State transport undertakings\/corporations are established by law with a view to providing publ<\/p>\n
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\nIllustration : ABC Ltd. supplies the service valued at ₹ 3,00,000\/- excluding tax to Government department. The department while making the payment of ₹ 3,00,000\/- should deduct ₹ 3000\/- on account of CGST and ₹ 3000\/- on account of SGST and make a net payment of ₹ 2,94,000\/- to ABC Ltd. Thereafter, the de<\/p>\n
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\nQuestion 31 : Whether a Government Department, required to deduct tax at source, is liable to take registration as a normal taxpayer?
\nAnswer : The Government Department is required to take registration as a normal taxpayer only if it makes a taxable supply of goods and\/or services and in such cases, the registration shall be obtained on the basis of PAN but Bank account is not mandatory. However, if it is not making any taxable supply of goods and\/or services, it is required to register only as a deductor of tax at source on the basis of TAN\/PA<\/p>\n
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