FAQ on GOVERNMENT SERVICES under GST
GST
Dated:- 10-10-2017
FAQ on GOVERNMENT SERVICES under GST
\n=============
\nDocument 1
\nFAQ on GOVERNMENT SERVICES under GST
\nQuestion 1: Are all services provided by the Government or local authority exempted from
\npayment of tax?
\nAnswer: No, all services provided by the Government or a local authority are not exempt from
\ntax. As for instance, services, namely, (i) services by the Department of Posts by way of speed
\npost, express parcel post, life insurance, and agency services provided to a person other than
\nGovernment; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of
\nan airport or a port; (iii) transport of goods or passengers; or (iv) any service, other than services
\ncovered under (i) to (iii) above, provided to business entities are not exempt and that these
\nservices are liable to tax.
\nThat said, most of the services provided by the Central Government, State Government, Union
\nTerritor<\/p>\n
= = = = = = = =<\/p>\n
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For full text:-Visit the Source <\/a><\/p>\n
\nan aircraft or a vessel, inside or outside the precincts of an airport or a port, the service
\nrecipients are required to pay the tax under reverse charge mechanism.
\nQuestion 3: What is the meaning of 'Government'?
\nAnswer: As per section 2(53) of the CGST Act, 2017, 'Government' means the Central
\nGovernment. As per clause (23) of section 3 of the General Clauses Act, 1897 the
\n'Government' includes both the Central Government and any State Government. As per
\nclause (8) of section 3 of the said Act, the 'Central Government', in relation to anything done
\nor to be done after the commencement of the Constitution, means the President. As per
\nArticle 53 of the Constitution, the executive power of the Union shall be vested in the President
\nand shall be exercised by him either directly or indirectly through officers subordinate to him in
\naccordance with the Constitution. Further, in terms of Artic<\/p>\n
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\nofficers subordinate to him who exercise the executive powers of the State vested in the
\nGovernor and in the name of the Governor.
\nDirectorate of Commercial Taxes, West Bengal
\nNote: Reference to WBGST Act, 2017 includes reference to CGST Act, 2017 also.
\nDisclaimer: Answer is only for educational and guidance purposes and do not hold any legal validity. For complete details
\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\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
\nthe following:
\n\u2022 a “Panchayat\u201d as defined in clause (d) of article 243 of the Constitution;
\n\u2022 a “Municipality” as defined in clause (e) of article 243P of the Constitution;
\n\u2022 a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally\n<\/p>\n
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\ndevelopmental works like infrastructure, housing, residential & commercial development,
\nconstruction of houses, etc. The Governments setup these authorities under the Town and
\nPlanning Act. Examples of such developmental authorities are Delhi Development Authority,
\nAhmedabad Development Authority, Bangalore Development Authority, Chennai
\nMetropolitan Development Authority, Bihar Industrial Area Development Authority, etc. Such
\ndevelopmental authorities formed under the Town and Planning Act are not qualified as local
\nauthorities for the purposes of the GST Acts.
\nQuestion 6: Would a statutory body, corporation or an authority constituted under an Act
\npassed by the Parliament or any of the State Legislatures be regarded as 'Government' or
\n“local authority\u201d for the purposes of the GST Acts?
\nAnswer: A statutory body, corporation or an authority created by the Parliament or a State
\nLegislature is neither 'Government' nor a 'local authority'. Such statu<\/p>\n
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\nAnswer: Services provided by one department of the Central Government\/State Government
\nto another department of the Central Government\/ State Government are exempt under
\nnotification No. 12\/2017-Central Tax (Rate), dated 28.06.2017 [S No 8 of the Table].
\nHowever, this exemption is not applicable to:
\nDirectorate of Commercial Taxes, West Bengal
\nNote: Reference to WBGST Act, 2017 includes reference to CGST Act, 2017 also.
\nDisclaimer: Answer is only for educational and guidance purposes and do not hold any legal validity. For complete details
\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\n(a) services provided by the Department of Posts by way of speed post, express parcel post,
\nlife insurance, and agency services provided to a person other than the Central
\nGovernment, the State Government and Union Territory;
\n(b) services in relation to a vessel or an aircraft i<\/p>\n
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\nActs will not be covered under the definition of 'Government' and therefore, services provided
\nby them will be taxable unless exempted by a notification.
\nQuestion 10: Are various regulatory bodies formed by the Government covered under the
\ndefinition of 'Government'?
\nAnswer: No. A regulatory body, also called regulatory agency, is a public authority or a
\ngovernmental body which exercises functions assigned to them in a regulatory or supervisory
\ncapacity. These bodies do not fall under the definition of Government.
\nExamples of regulatory bodies are – Competition Commission of India, Press Council of India,
\nDirectorate General of Civil Aviation, Forward Market Commission, Inland Water Supply
\nAuthority of India, Central Pollution Control Board, Securities and Exchange Board of India.
\nQuestion 11: Will the services provided by Police or security agencies of Government to PSUs
\nor corporate <\/p>\n
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\nservices for the purpose of levy of tax?
\nAnswer: The services by way of speed post, express parcel post, life insurance, and agency
\nservices provided to a person other than the Government or Union territory are not exempt. In
\nDirectorate of Commercial Taxes, West Bengal
\nNote: Reference to WBGST Act, 2017 includes reference to CGST Act, 2017 also.
\nDisclaimer: Answer is only for educational and guidance purposes and do not hold any legal validity. For complete details
\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\nrespect of these services the Department of Posts is liable to pay tax without application of
\nreverse charge.
\nHowever, the following services provided by the Department of Posts are not liable to tax.
\n(a) Basic mail services known as postal services such as post card, inland letter, book post,
\nregistered post provided exclusively by the <\/p>\n
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\nexemption is applicable to only those services which are received for the purpose other than
\ncommerce, industry or any other business or profession. In other words, if the Government
\nreceives such services for the purpose of business or commerce, then tax would apply on the
\nsame.
\nQuestion 15: Whether the exemption is applicable to online information and database access
\nor retrieval services received by Government or local authorities from provider of service
\nlocated in non-taxable territory?
\nAnswer: No. Online information and database access or retrieval services received by
\nGovernment or local authorities from non-taxable territory for any purpose including
\nfurtherance of business or commerce are liable to tax.
\nQuestion 16: What are the functions entrusted to a municipality under Article 243W of the
\nConstitution
\nAnswer: The functions entrusted to a municipality under the Twelfth Schedule<\/p>\n
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\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\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 stops and public conveniences.
\n(r) Regulation of slaughter houses and tanneries.
\nQuestion 17: What are the functions entrusted to a Panchayat under Article 243G of the
\nConstitution?
\nAnswer: The functions entrusted to a Panchayat under the Eleventh Schedule to Article 243G
\nof the Constitution are as under:
\n(i) Agriculture, including agricultural extension. (ii) Land improvement, implementation of land
\nreforms, land consolidation and soil conservation. (iii) Minor irrigation, water management and
\nwatershed d<\/p>\n
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\nparticular, of the Scheduled Castes and the Scheduled Tribes. (xxviii) Public distribution system.
\n(xxix) Maintenance of community assets.
\nQuestion 18: What is the significance of services provided by Government or a local authority
\nby way of tolerating non-performance of a contract for which consideration in the form of
\nfines or liquidated damages is payable to the Government or the local authority?
\nAnswer: Non-performance of a contract or breach of contract is one of the conditions
\nnormally stipulated in the Government contracts for supply of goods or services. The
\nagreement entered into between the parties stipulates that both the service provider and
\nservice recipient abide by the terms and conditions of the contract. In case any of the parties
\nbreach the contract for any reason including non-performance of the contract, then such
\nperson is liable to pay damages in the form of fines or penalty to the other party. Non<\/p>\n
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\nthe construction and handover the project by the specified date i.e., on or before 31.12.2017.
\nAs per the contract, the department asks for damages\/penalty from M\/s. ABC and threatened
\nDirectorate of Commercial Taxes, West Bengal
\nNote: Reference to WBGST Act, 2017 includes reference to CGST Act, 2017 also.
\nDisclaimer: Answer is only for educational and guidance purposes and do not hold any legal validity. For complete details
\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\nto go to the court if not paid. Assuming that M\/s ABC has paid an amount of Rs. 10,00,000\/- to
\nthe department for non-performance of contract. Such amount paid to department is
\nexempted from payment of tax.
\nQuestion 19: Whether services in the nature of change of land use, commercial building
\napproval, utility services provided<\/p>\n
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\nof the Constitution. As per the said clause, the States of Arunachal Pradesh, Assam, Jammu
\nand Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and
\nUttarakhand have been given the status of special category States for the purpose of GST
\nActs. Notification No. 12\/2017-Central Tax (Rate), dated 28.06.2017 (Sl. No. 7 of the Table)
\nprovides for exemption from payment of tax in respect of services provided to a business entity
\nlocated in a special category State with a turnover up to Rs. 10 lakh rupees. However, this
\nexemption is not be applicable to (a) services – (i) by the Department of Posts by way of speed
\npost, express parcel post, life insurance, and agency services provided to a person other than
\nGovernment; (ii) in relation to an aircraft or a vessel, inside or outside the precincts of an airport
\nor a port; (iii) of transport of goods or passengers and (iv) services by way of rent<\/p>\n
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\nthe recipient of supply of goods or services or both instead of the supplier of such goods or
\nservices or both under sub-section (3) or sub-section (4) of section 9 of the CGST Act, 2017, or
\nunder sub-section (3) or subsection (4) of section 5 of the IGST Act, 2017.
\nDirectorate of Commercial Taxes, West Bengal
\nNote: Reference to WBGST Act, 2017 includes reference to CGST Act, 2017 also.
\nDisclaimer: Answer is only for educational and guidance purposes and do not hold any legal validity. For complete details
\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\nQuestion 24: Whether reverse charge is applicable to services provided by Government or
\nlocal authorities?
\nAnswer: Yes, reverse charge is applicable in respect of services provided by Government or
\nlocal authorities to any person whose turnover exceeds Rs.20 lakhs (Rs.10 <\/p>\n
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\nany supply of goods would be treated as supply of pure services. On the other hand, let us
\ntake the example of a governmental authority awarding the work of maintenance of street
\nlights in a Municipal area to an agency which involves apart from maintenance, replacement
\nof defunct lights and other spares. In this case, the scope of the service involves maintenance
\nwork and supply of goods, which falls under the works contract services. The exemption is
\nprovided to services involves only supply of services and not for works contract services.
\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
\ngiving on hire to a state transport undertaking is exempted from tax. The exemption is
\napplicable to services provided to state transport undertaking and not to other <\/p>\n
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\ndepartment or establishment of the Central Government or State Government; or (b) local
\nauthority; or (c) Governmental agencies; or (d) such persons or category of persons as may
\nbe notified by the Government on the recommendations of the Council, to deduct tax at the
\nrate of one per cent on account of CGST and one percent on account of SGST from the
\nDirectorate of Commercial Taxes, West Bengal
\nNote: Reference to WBGST Act, 2017 includes reference to CGST Act, 2017 also.
\nDisclaimer: Answer is only for educational and guidance purposes and do not hold any legal validity. For complete details
\n(law, rules, notifications and other information) please refer to the relevant section of this website.
\nFAQ on GOVERNMENT SERVICES under GST
\npayment made or credited to the supplier where the total value of the supply under a contract
\nexceeds two lakh and fifty thousand rupees (excluding tax payable under the GST Acts). The
\ndeductor sh<\/p>\n
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\ndeductee in his Form GSTR-2A) of the deductee and can be utilized for payment of output
\ntax.
\nQuestion 30: Whether an amount in the form of royalty or any other form paid\/payable to the
\nGovernment for assigning the rights to use of natural resources is taxable?
\nAnswer: The Government provides license to various companies including Public Sector
\nUndertakings for exploration of natural resources like oil, hydrocarbons, iron ore, manganese,
\netc. For having assigned the rights to use the natural resources, the licensee companies are
\nrequired to pay consideration in the form of annual license fee, lease charges, royalty, etc to
\nthe Government. The activity of assignment of rights to use natural resources is treated as
\nsupply of services and the licensee is required to pay tax on the amount of consideration paid
\nin the form of royalty or any other form under reverse charge mechanism.
\nQuestion 31: Whether a Government Department, required to deduct<\/p>\n
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