Clarifications Regarding Applicable GST Rates & Exemptions on Certain Services

Applicable GST Rates & Exemption on Certain Services – Clarification

Circular no. 164 /20 /2021-GST dated 06th October 2021 provides clarification on the following activities:

1. Services by cloud/central kitchens: Services of restaurants, cafes and similar entities, by way of cooking and supply of food, are considered as service by cloud/central kitchens. In the 45th meeting, the GST council clarified that cooking and food supply services by cloud/central kitchens are covered under restaurant service; 5% GST will apply without ITC.

2. Ice cream supplied by ice cream parlours: Ice cream parlours or similar outlets do not cook ice cream like a restaurant; they sell already manufactured ice creams as goods, not as a service, irrespective of having certain ingredients of service; 18% GST will apply.

3. Coaching services to students: GST Council clarifies that coaching institutions and NGOs providing services to students under the central scheme of Scholarships for Students with Disabilities, for which total expenditure provided/borne by the Government, are exempt from GST.

4. Satellite launch services by NSIL (New Space India Ltd), an Indian company wholly owned by the Government, are similar to services by ANTRIX Corporation Ltd., hence rules of circular no. 2/1/2017-IGST dated 27.09.2017, applicable to ANTRIX Corporation, will apply to NSIL too. GST will not apply to Satellite launch services supplied outside India, i.e. export of services. Satellite launch services rendered within India would be taxable in the hands of the recipient of services.

5. Overloading charges at toll plaza will be liable for the same treatment as applicable/given to toll charges, clarified by the GST Council in the 45th meeting. "The entry no. 23 of notification no. 12/2017-Central Tax dated 28th June 2017 describes services of accessing a road/bridge by paying toll charges to the Government." Hence, GST is not payable on toll charges.

6. Vehicles to State Transport Undertakings (STU) and Local Authorities rented or given on hire are EXEMPTED from GST irrespective of that such vehicles are run on routes, timings, decided by the STU or Local Authorities and under the effective control of them.

7. Supply of services by way of granting mineral exploration and mining rights: GST Council specifically amended the rate schedule to resolve the dispute regarding the GST rate on these services, and with effect from 01.01.2019, the applicable GST rate on these services is 18%. But the resolution on the dispute of GST rate on these services supplied from 01.07.2017 to 31.12.2018 has been provided in the 45th meeting and clarified that, even if the rate schedule did not specifically mention the GST rate on services by way of grant of mining rights, during the period 01.07.2017 to 31.12.2018, it was taxable at 18% in view of the principle laid down in the 14th meeting of the council.

8. Admission to amusement parks etc.: GST rate on admission to casinos, race clubs, and sporting events like IPL is 28%Whereas, GST rate, in all other cases like admission to amusement parks, theme parks, any place having joy rides, merry-go-rounds, go-karting etc., whether indoor or outdoor, is 18%.

9. Services by contract manufacturers to brand owners or others to manufacture alcoholic liquor for human consumption: As recommended by the GST Council in its 45th meeting, the GST rate on services rendered by way of job work for the activity mentioned above is 18%.

The 50th GST Council Meetings 

The 50th GST Council meeting announced these two major rate revisions -

1. Utility Vehicles

At its 50th meeting, the GST Council voted to eliminate the differential rate of compensation cess and move all Utility Vehicles (UVs) into the 22 per cent cess category, an increase of 2 per cent. Sport utility vehicles (SUVs) and multi-utility vehicles (MUVs) will now be subject to the new tax bracket as a result of the ruling.

No matter what they are called—SUV, MUV, MPV, and so forth—the council has agreed to include all utility vehicles. No matter what the vehicle is called, according to the council, as long as it complies with certain requirements, it will be subject to a 22 per cent compensation cess in addition to a 28 per cent GST.

According to the update, a 22 per cent compensating cess would be added to the 28 per cent GST for any vehicles having a length greater than 4000mm, an engine displacement greater than 1.5 litres, and a ground clearance greater than 170mm.

Previously, the 22 per cent compensatory cess applied solely to Sport Utility Vehicles with a length over 4000 mm and an engine displacement over 1.5 litres. Now, any vehicle that satisfies the prerequisites listed before would be included in the pricing range.

2. Online Gaming

The GST Council had declared that a GST of 28% will be levied on the gross gaming value or the total revenue earned by the gaming company and not just the platform fees that the gaming company charges for providing its services. This tax rate will be applicable from 1st October 2023 and will be reviewed after six months from the date of implementation.

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