GST

Lecture - 02
CA Jasmeet Singh
Topics
1. Exemption
2. TDS/TCS
3. Supply
4. RCM
 CA Jasmeet Singh Arora 1

TDS & TCS UNDER GST

Section-51 Tax deduction at source (TDS)

❖ Following Person Shall Deduct Tax u/s 51

• Central Govt./State Govt. → Department/Establishment
• Local Authority
• Government Agencies
• Public Sector Undertakings
• Society Established by CG/SG under Society Act
• An Authority/Board or other body
▪ Setup by an act of Parliament/State legislature
▪ Where 51% or more equity/control with Govt

❖ When to Deduct TDS

Supply of taxable G/S under a CONTRACT Exceeds 250000 Excluding GST.

❖ TDS Rate
1% (CGST) + 1% (SGST) or 2% (IGST) on payment made or credited to supplier for taxable
goods & services. [Value shall be taken for deduction of TDS, exclusive of GST shown
in Invoices]

❖ When not Required to Deduct TDS

➢ Value of taxable Supplies in a Contract Value ≤ Rs 250000
➢ Exempt Supplies
➢ Supply Under RCM
➢ Payment made to Unregistered Supplier
➢ Goods / Services Supplied between person notified to deduct TDS
➢ Location of Supplier & Place of Supply (In Same State & But Recipient's place in
other State)

➢ In Such Case TDS is deduct in form of Rajasthan's State tax that would not be
possible to be deducted by Recipient in Punjab
↓
➢ Hence TDS N.A. on Such transaction
❖ Other Points
➢ Deductor Shall Deposit TDS Deducted by 10th of Succeeding month
➢ TDS Certificate in form GSTR-7A shall be provided to deductee
➢ TDS deducted shall reflect in Cash ledger of deductee
 CA Jasmeet Singh Arora 2

➢ Failure to Deposit TDS- Interest @18% & Penalty

Section-52 Tax Collected at source (TCS)

❖ Who shall collect TCS

➢ Every E-Commerce Operator (Not an agent)
➢ Amount collected by ECO.

❖ TCS Rate
0.5% (CGST) + 0.5% (SGST) or 1% (IGST) on Net Value of taxable Supplies.
Net Value = Value of G/S Supplied - Returned Supply

❖ Eco Obligation
➢ Eco Shall File Statement in form GSTR-8 & Deposit TCS within 10 days from end of
month
➢ Eco Shall also file Annual Statement GSTR 9-B before 31st Dec following end of FY
Detailing
• Outward Supplies of G/S Including returns made
• Amount collected as TCS

❖ TCS Not applicable in following cases

➢ Supplies Own Product through website hosted by him
➢ Supplies Different Vendor Product & amount collected by Vendor Only
➢ Supply of Services notified under section 9(5)
➢ Exempt Supplies
➢ Recipient Required to pay tax on RCM.
➢ Supply of Services by Supplier not liable to register.

Clarifications
1. Clarification on TCS liability in case of multiple ECOs in one transaction

In the case of the ONDC Network (Open Network for Digital Commerce) there can be
multiple ECOs in a single transaction - one providing an interface to the buyer and the other
providing an interface to the seller.
Issue 1: In a situation where multiple ECOs are involved in a single transaction of supply of
goods or services or both through ECO platform and where the supplier-side ECO himself
is not the supplier in the said supply, who is liable for compliances under section 52
including collection of TCS?

Buyer Buyer- Supplier-

Side ECO side ECO Supplier
s
 CA Jasmeet Singh Arora 3

Clarification:
The compliances under section 52, including collection of TCS, is to be done by the supplier-
side ECO who finally releases the payment to the supplierfor a particular supply made by the
said supplier through him.

Issue 2 : In a situation where multiple ECOs are involved in a single transaction of supply
of goods or services or both through ECO platform and the Supplier-side ECO is himself
the supplier of the said supply, who is liable for compliances under section 52 including
collection of TCS?
Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO while making
payment to the supplier for the particular supply being made through it.

Other Provisions Related To TCS

1. Unregistered persons with aggregate turnover upto threshold limit permitted to

supply goods through an ECO.

Person not liable for registration u/s 22 shall be allowed to make supply Goods
through ECO subject to following conditions:
(i) Restricted from making inter-State supply of goods;
(ii) Restricted from making supply of goods through ECO in more than one
State/Union territory;
(iii) Must be having PAN
(iv) Before making any supply of goods through ECO, declare on the common
portal:
a. PAN
b. address of business and
c. State/UT in which such persons seek to make such supply
(v) enrolment number h a v e b e e n g r a n t e d on the common portal on
successful validation of the PAN declared above;
(vi) such persons shall not be granted more than one enrolment number in a
State/UT;
(vii) no supply of goods shall be made by such persons through ECO unless such
persons have been granted an enrolment number on the common portal; and
(viii) the enrolment number shall cease to be valid from the effective date of
registration.

Obligations Of ECO where URP makes supply through it.

(i) ECO shall allow the supply of goods through it by the unregistered person only
 CA Jasmeet Singh Arora 4

if enrolment number has been allotted

(ii) ECO shall not allow any inter-State supply of goods through it by the unregistered
person;
(iii) ECO shall not collect tax at source under section 52
(iv) ECO shall furnish the details of supplies of goods made through it by the said
person in the statement in Form GSTR-8 electronically on the common portal.
Where multiple ECOs are involved in a single supply of goods through ECO platform,
“ECO” shall mean the ECO who finally releases the payment to the said person for the
said supply made by the said person through him.

2. Special procedure to be followed by ECOs in respect of supplies of goods through

them by composition taxpayers
a. The ECO shall not allow any inter-State supply of goods through it by the said
person;
b. The ECO shall collect TCS
c. The ECO shall furnish the details of supplies of goods made through it by the
said person in the statement in Form GSTR-8 electronically on the common
portal.
 CA Jasmeet Singh Arora 1

Supply Under GST

Section 9 is the charging provision of the CGST Act. It provides that

All intra-State supplies would be liable to CGST. The levy is on supply of all goods or
services or both except on the supply of alcoholic liquor for human consumption.
However, supply of petroleum crude, high speed diesel, motor spirit (petrol), natural gas
and aviation turbine fuel are also included in GST.

Supply is the Taxable event to levy GST

Section 7 Meaning Of Supply

Section 7(1) (a)

Supply includes all forms of supply (goods and / or services) and includes agreeing to
supply when they are for a consideration and in the course or furtherance of business. It
specifically includes
(i) Sale (iii) Barter (v) License (vii) Lease
(ii) Transfer (iv) Exchange (vi) Rental (viii) Disposal.

Section 7(1) (aa)

Activities or transactions between an association, club or similar entities and its members
or constituents as ‘supply’. For the purpose of taxability, the members and the entity shall
be deemed to be two distinct persons.
Example:
a) Resident Welfare Association (RWA) of Sanskriti Society supplies air-conditioners to its
members at a concessional price.
b) A RWA collects maintenance charges from its members for services provided.

Section 7(1) (b)

Supply includes import of a service, made for a consideration and whether or not in the
course or furtherance of business.

Section 7(1) (c)

The activities specified in Schedule I, made or agreed to be made without consideration.

Schedule I

1. Permanent transfer of business assets where input tax credit has been availed.
E.g. Infosys limited upgraded their 1000 Laptops and donated their old laptops (ITC
Claimed) to the Government Schools. In this case, such donation is treated as supply as
per Schedule I.
 CA Jasmeet Singh Arora 2

2. Supply of goods and / or services between related person, or between distinct

persons:
E.g. Free supplies to related persons, stock transfers to a unit outside the State/a
different business vertical, etc. will be reckoned as supplies.
Meaning of Distinct person
A person who has obtained/is required to obtain more than one registration, whether
in one State/Union territory or more than one State/Union territory shall, in respect of
each such registration, be treated as distinct persons [Section 25(4) of the CGST Act].

Meaning of Related Person

"Related persons" means
(i) Such persons are partners in business.
(ii) Any person holds twenty-five per cent or more of shares of both of them.
(iii) One of them controls the other (Holding Subsidiary company)
(iv) Together they directly or indirectly control a third person
(v) Such persons are employer and employee;
(vi) They are members of the same family;

As per section 2(49) "family" means,— (i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or
mainly dependent on the said person.

3. Supply of goods by a principal to his agent or by agent to his principle, where the
agent undertakes to supply or receive such goods on behalf of the principal.
Note:
• Where principal Invoices to Agent and Agent Invoices to customer: then such
Agent will fall under Schedule-I and
• Where principal Invoices directly to customer and the transaction mediated by an
Agent: then such agent will not be covered under Schedule-I

4. Import of services
by a taxable
person from a
related person, in
the course or
furtherance of
business
 CA Jasmeet Singh Arora 3

Section 7(1A)
Where transaction is considered as supply under sub section (1), they shall be treated
either as supply of goods or supply of service as referred in schedule II.
S. No Activity/ Type Nature of
Transaction Supply
1. Transfer Any transfer of title in goods immediate or in Goods
future date.
Any transfer of right in goods/ undivided share in Services
goods without transfer of title in goods.
2. Land and Any lease or letting out of land or building services
Building including a commercial, industrial or residential
complex.
3. Treatment or Any treatment or process which is applied to Services
Process another person’s goods
4. Transfer of Goods forming part of business assets are Goods
Business Assets permanently transferred or disposed off
Goods held/used for business are put to private use Services
or are made available to any person for non-
business purpose
Goods forming part of assets of any business Goods
carried on by a person who ceases to be a taxable
person, shall be deemed to be supplied by him, in
the course or furtherance of his business,
immediately before he ceases to be a taxable
person.
Eg. Mr. X, a Electronic trader, is winding up his
business. Any goods left in stock shall be deemed
to be supplied by him.
Exception
1. Business is transferred as a going concern
to another person
2. Business is carried on by a personal
representative who is deemed to be a
taxable person.
5. Following Supply shall be considered as supply of service
a) Sale of under construction building where whole or part of the consideration is
received before issuance of completion certificate.
However, where the entire consideration has been received after issuance of
completion certificate or after its first occupation, whichever is earlier, then
such transaction is neither supply of good nor supply of service.

Eg. DLF has constructed individual residential units for agreed consideration of
Rs. 2 crore per unit. Rs. 1 crore per unit were received before issuance of
 CA Jasmeet Singh Arora 4

completion certificate by the competent authority and balance after

completion
b) Temporary transfer or permitting use or enjoyment of any intellectual
property right
c) Development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of IT software.
Eg. XYZ software developers developed ERP software for A ltd.
d) Agreeing to obligation to refrain from an act, or to tolerate an act or situation,
or to do an act.
Above three activities must comply with the following Conditions:
I. There must be an expressed or implied agreement or contract.
II. Consideration must flow in return to this contract/agreement.
Taxability of some of the transactions has been discussed in detail later.
6. Following composite supplies :-
a) Works contract services related to immovable property wherein transfer of
property in goods (whether as goods or in some other form) is involved in the
execution of such contract
b) Supply of food or any other article for human consumption or any drink (soft
drink).

Section 7(2)
Certain supplies will be neither a supply of goods, nor a supply of services: The law lists
down matters which shall not be considered as ‘supply’ for GST. This list includes:

A. Activities/ transactions in Schedule III(Negative List)

(a) Services by an employee to an employer in the course or in relation to his
employment.
(b) Services by any Court or Tribunal established under any law for the time being in
force;
(c) Functions performed by MPs, MLAs, etc.; the duties performed by a person who
holds any post in pursuance of the provisions of the Constitution in that capacity;
the duties performed by specified persons in a body established by the Central
State Government or local authority, not deemed as an employee;
(d) Sale of land and Sale of Building (except sale of under-construction premises
where the part or full consideration is received before issuance of completion
certificate or before its first occupation, whichever is earlier.
(e) Actionable claims, other than lottery, betting and gambling and
(f) Services of funeral, burial, crematorium or mortuary including transportation of
the deceased.
“Service by way of grant of alcoholic liquor licence, against consideration in the form of
licence fee or application fee shall be neither supply of Goods nor supply of Services”
 CA Jasmeet Singh Arora 5

It may be noted that services provided by the Government to business entities including by
way of grant of privileges, licences, mining rights, natural resources such as spectrum etc.
against payment of consideration in the form of fee, royalty etc. are taxable under GST. Tax
is required to be paid by the business entities on such services under reverse charge.

B. Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to employee
shall not be treated as supply of goods or services or both.

Perquisites provided by the employer to the employee not liable to GST if following
conditions are satisfied:
a) It should be as per contractual agreement between employer & employee.
b) Employer should not avail ITC on inward supply of such goods/service. If employer has
already availed ITC, needs to reverse it

Section 7(3)
The Central Government or the State Government may notify such other transactions to
either qualify as ‘supply of goods’ or as ‘supply of services’ This notification must be issued
only upon recommendations from the Council.

Section 8 Composite And Mixed Supplies

As per section 2(30), "composite supply" means a supply made by a taxable person to a
recipient consisting of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with each
other in the ordinary course of business, one of which is a principal supply.

Principal supply means the supply of goods or services which constitutes the predominant
element of a composite supply and to which any other supply forming part of that
composite supply is ancillary

Eg. When a consumer buys a television set and he also gets warranty and a maintenance
contract with the TV, this supply is a composite supply. In this example, supply of TV is the
principal supply, warranty and maintenance services are ancillary.
Eg. Charger supplied alongwith mobile phone is a composite supply.

As per section 2(74), "mixed supply" means two or more individual supplies of goods or
services, or any combination thereof, made in conjunction with each other by a taxable
person for a single price where such supply does not constitute a composite supply:
Eg. A gift pack comprising of chocolates and sweets is a mixed supply
 CA Jasmeet Singh Arora 6

Eg. A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drink and fruit juices when supplied for a single price is a mixed supply.

The tax liability on a composite or a mixed supply

a) a composite supply comprising two or more supplies, one of which is a principal supply,
shall be treated as a supply of such principal supply; and
b) a mixed supply comprising two or more supplies shall be treated as a supply of that
particular supply which attracts the highest rate of tax.

Clarifications

1. Art works sent by artists to galleries for exhibition

Sending artworks to a gallery for exhibition does not entail any financial transaction or
consideration flowing from the gallery to the artist.
As a result, this does not qualify as a taxable supply. The actual supply occurs when a
buyer buys artwork from the gallery and applicable gst shall be levied at the time of
such supply.

2. Donations / Charity / Gift

GST is not leviable where all the following three conditions are satisfied namely:
a) Gift or donation is made to a charitable organization
b) Payment has the character of gift or donation
c) Purpose is philanthropic (i.e., it leads to no commercial gain) and not advertisement

Bhushan donated a blackboard to Yoganisht Sansthan - a charitable yoga institution.

Yoganisht Sansthan printed underneath the blackboard so donated - “Good wishes from
Mr. Bhushan”.

3. Taxability of ‘tenancy rights’/pagadi under GST

• Transfer of tenancy rights against tenancy premium is a form of lease or renting of
property and such activity is specifically declared to be a service in of Schedule II i.e.
Any lease, tenancy, easement, licence to occupy land is a supply of services.
• The transfer of tenancy rights cannot be treated as sale of land/ building.
• Transfer of tenancy rights to a new tenant against consideration in the form of
tenancy premium is taxable
• Services provided by outgoing tenant by way of surrendering the tenancy rights
against consideration in the form of tenancy premium is liable to GST.

4. Inter-State movement of various modes of conveyance

Inter-State movement of various modes of conveyance, between distinct persons for
i) carrying goods or passengers or both; or
 CA Jasmeet Singh Arora 7

ii) for repairs and maintenance,

shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be
leviable to IGST.
However, where such movement is for further supply of the same conveyance then
such movement shall be treated as supply and GST shall be levied.

5. Supply of printed books, pamphlets, brochures, envelopes, annual reports, leaflets,

cartons, boxes etc., printed with design, logo, name, address or other contents
supplied by the recipient of such printed goods

a) In the case of printing of books, pamphlets, brochures, annual reports, and the like,
where only CONTENT IS SUPPLIED by the publisher or the person who owns the
usage rights to the intangible inputs while the physical inputs including paper used
for printing belong to the printer,
• supply of printing [of the content supplied by the recipient of supply] is the
principal supply and therefore,
• such supplies would constitute supply of service

b) In case of supply of printed envelopes, letter cards, printed boxes, tissues, pen,
napkins, wall paper etc. by the printer using its physical inputs including paper to
print the design, logo etc. supplied by the recipient of goods,
• predominant supply is supply of goods and
• the supply of printing of the content [supplied by the recipient of supply] is
ancillary to the principal supply of goods and therefore
• such supplies would constitute supply of goods.

6. Retreading of tyres
Pre-dominant element is process of retreading which is a supply of service. Rubber
used for retreading is an ancillary supply.
Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded
tyres, is a supply of goods.

7. Buy one get one free offer

• It may appear at first glance that in case of offers like “Buy One, Get One Free”, one
item is being “supplied free of cost” without any consideration. In fact, it is not an
individual supply of free goods, but a case of two or more individual supplies where
a single price is being charged for the entire supply. It can at best be treated as
supplying two goods for the price of one.
 CA Jasmeet Singh Arora 8

• Taxability of such supply will be dependent upon as to whether the supply is a

composite supply or a mixed supply and the rate of tax shall be determined
accordingly

8. Clarification regarding GST Applicability on Liquidated Damages, Compensation and

Penalty arising out of Breach of Contract or Other Provisions of Law.

a) Liquidated Damages
➢ ‘Liquidated Damages’ refers to cash compensation payable to aggrieved party
for breach of contract.
➢ Liquidated damages cannot be said to be a consideration received for tolerating
the breach or non-performance of contract. They are rather payments for not
tolerating the breach of contract.
➢ Hence, where ‘liquidated damages’ is paid only to compensate for loss or
damage suffered by the aggrieved party due to breach of the contract, and
✓ there is no agreement, express or implied, by the aggrieved party receiving
the liquidated damages, to refrain from or tolerate an act or to do anything
for the party paying the liquidated damages,
✓ such payments do not constitute consideration for a supply & are not
taxable.
➢ Eg. Penalty stipulated in a contract for delayed construction of houses
➢ Eg. Forfeiture of earnest money by a seller in case of breach of ‘an agreement to
sell’ an immovable property by the buyer.
Forfeiture of such earnest money is not a consideration for tolerating the breach
of contract but as a compensation for the losses suffered and as a penalty for
discouraging the non-serious buyers
Such payments being merely flow of money are not a consideration for any
supply and are not taxable.
➢ The main element in such cases is to consider whether payments constitute
consideration for another independent contract envisaging tolerating an act or
situation or refraining from doing any act or situation or simply doing an act. If
the answer is yes, then it constitutes a ‘supply’ irrespective of by what name it is
called.
Eg. A contract for package tour may stipulate forfeiture of security deposit in
the event of cancellation of tour by the customer.
Eg. A contract for lease of movable or immovable property may stipulate that
the lessee shall not terminate the lease before a certain period and if he does so
he will have to pay certain amount as early termination fee or penalty.
 CA Jasmeet Singh Arora 9

b) Cheque dishonor fine/ penalty

➢ The supplier wants payment to be received on time and does not want cheque
to be dishonoured.
➢ There is never an implied or express offer or willingness on part of the supplier
that he would tolerate deposit of an invalid, fake or unworthy instrument of
payment against consideration in the form of cheque dishonour fine or penalty.
➢ Therefore, cheque dishonor fine or penalty is not a consideration for any service
and not taxable.

c) Penalty imposed for violation of laws

➢ Penalty imposed for violation of laws such as traffic violations, or for violation
of pollution norms or other laws are also not consideration for any supply
received and are not taxable
➢ Laws are not framed for tolerating their violation. They stipulate penalty not for
tolerating violation but for not tolerating, penalizing and deterring such
violations.
➢ There is no agreement between the Government and the violator specifying that
violation would be allowed or permitted against payment of fine or penalty.

d) Forfeiture of salary or payment of bond amount in the event of employee leaving

employment before the minimum agreed period.
➢ The said amounts are recovered by the employer not as a consideration for
tolerating the act of such premature quitting of employment but as penalties for
dissuading the non-serious employees from taking up employment and to
discourage and deter such a situation.
➢ Further, the employee does not get anything in return from the employer
against payment of such amounts.
➢ Therefore, such amounts recovered by the employer are not taxable as
consideration for the service of agreeing to tolerate an act or a situation.

e) Late payment surcharge or fee.

➢ 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.
➢ Almost all service providers across the world provide the facility of accepting
late payments with late fine or penalty
 CA Jasmeet Singh Arora 10

➢ 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.
➢ However, same cannot be said of cheque dishonor penalty as discussed earlier.

f) Fixed charges for power

➢ The price charged for electricity by the power generating companies from the
State Electricity Boards (SEBs)/DISCOMS or by SEBs/DISCOMs from individual
customers has 2 components namely,
a) Minimum fixed charge, and
b) Variable per unit charge
➢ are charged for sale of electricity and are thus not taxable, as electricity is
exempt from GST.

g) Cancellation charges
➢ Suppliers of services such as hotel accommodation, tour and travel,
transportation etc. provide the facility of cancellation of the intended supplies
within a certain time period on payment of cancellation fee.
➢ This cancellation facility against payment of charges is a natural part of supply.
➢ 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 should be assessed at the same rate as applicable to the
service contract, say air transport or tour operator service, or other such
services.
 CA Jasmeet Singh 1

Exemption Under GST

1. Services related to charitable and religious activities

A. Services by an entity registered under section 12AA / 12AB of the Income-tax Act, 1961 by
way of charitable activities. ‘Charitable Activities’ mean activities relating to
• PUBLIC HEALTH
• ADVANCEMENT OF RELIGION, spirituality or yoga;
• ADVANCEMENT OF EDUCATIONAL PROGRAMMES/SKILL DEVELOPMENT relating to,
(i) abandoned, orphaned or homeless children;
(ii) physically or mentally abused and traumatised persons;
(iii) prisoners; or
(iv) persons over the age of 65 years residing in a rural area
• PRESERVATION OF ENVIRONMENT
B. Services by a person by way of
i. conduct of any religious ceremony;
ii. renting of precincts of a religious place except where,
a) renting of rooms where charges are `1,000 or more per day
b) renting of premises,halls, kalyana mandapam or open area where charges are
`10,000 or more per day
c) renting of shops or other spaces for business or commerce where charges are
`10,000 or more per month.
C. Services by a specified organization
i. Kumaon Mandal Vikas Nigam Limited (KMVN), a Government of Uttarakhand
Undertaking;
ii. ‘Haj Committee of India’ or ‘State Haj Committee including Joint State Committee’.

D. Services by way of training or coaching in

(a) recreational activities relating to arts or culture, by an individual, or
(b) sports by charitable entities registered under section 12AA of the Income-tax Act.

2. Agriculture
(a) loading, unloading, packing, storage or warehousing of rice.
(b) warehousing of minor forest produce.
(c) storage/warehousing of Agricultural produce, rice, cereals, pulses, fruits and vegetables.
(d) 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
i. agricultural operations directly related to production of any agricultural produce
including cultivation, harvesting, threshing, plant protection or testing
ii. supply of farm labour
 CA Jasmeet Singh 2

iii. processes which do not alter the essential characteristics of agricultural produce
but make it only marketable for the primary market
iv. renting or leasing of agro machinery or vacant land
v. loading, unloading, packing, storage or warehousing of agricultural produce
vi. agricultural extension services
vii. services by any Agricultural Produce Marketing Committee or Board or services
provided by a commission agent for sale or purchase of agricultural produce
(e) Services by way of artificial insemination of livestock (other than horses)
(f) job work in relation to cultivation of plants and rearing of all life forms of animals.

3. Education services
i. Educational institution means
a) pre-school education and education up to higher secondary school or equivalent.
b) education as a part of a curriculum for obtaining a qualification recognised by any
Indian law
c) education as a part of an approved vocational education course.
ii. Services Provided BY an educational institution
a) to its students, faculty and staff
b) by way of conduct of entrance examination against consideration
iii. Services Provided To an educational institution
Services School College/Universities
transportation of students, faculty and staff; Exempt Taxable
catering, including any mid-day meals Exempt Taxable
security or cleaning or house-keeping Exempt Taxable
services
services relating to admission to, or conduct Exempt Exempt
of examination
supply of online educational journals or Taxable Exempt
periodicals
Note:

a) IIMs provide various long duration programs (1 year or more) for which they award
diploma/ degree certificate → Exempt
b) IIMs also provide various short duration/short term programs (less than 1 year) for which
they award participation certificate → Taxable.

4. Health care services

a) Services by a veterinary clinic in relation to health care of animals or birds
b) health care services by a clinical establishment, an authorised medical practitioner or para
medics
c) transportation of a patient in an ambulance
 CA Jasmeet Singh 3

Health care services Means diagnosis or treatment or care for illness, injury, deformity,
abnormality or pregnancy → Recognized System Of Medicine (
Allopathy/Ayurveda/Homeopathy/Naturopathy/ Yoga/Siddha/Unani. Naturopathy)

Note:

a) Reiki is not recognised system of medicine.

b) hair transplant or cosmetic or plastic surgery is taxable, except when undertaken to restore
or to reconstruct anatomy or functions of body affected due to congenital defects,
developmental abnormalities, injury or trauma.
c) Room Rent
• Intensive Care Unit (ICU) or Critical Care Unit (CCU) or Intensive Cardiac Care Unit (ICCU)
or Neo-Natal Intensive Care Unit (NICU), there would be full exemption irrespective of
amount of rent
• In case of other categories of rooms, Exemption is available only when rent charges do
not exceed ` 5,000 per day.
d) services provided by such senior doctors/consultants/technicians, whether employees or
not, are healthcare services which are exempt from GST.
e) Health care services provided by the clinical establishments will include food supplied to
the patients as advised by the doctor/nutritionists is a part of composite supply of
healthcare and not separately taxable. However, other supplies of food by a hospital to
patients (not admitted) or their attendants or visitors are taxable
f) Supply of services other than healthcare services such as renting of shops, auditoriums in
the premises of the clinical establishment, display of advertisements etc. will be subject to
GST.
g) 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

5. Passenger transportation services

i. Transport of passengers, with/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;
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.

However, nothing contained in items (b) and (c) above shall apply to services supplied
through an electronic commerce operator, and notified under sub-section (5) of Section 9 of
the CGST, 2017

ii. Service of transportation of passengers, with or without accompanied belongings, by:

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A. railways in a class other than—

a) first class; or
b) 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
The expression ‘public transport’ used in this Entry 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.
E. metered cabs or auto rickshaws (including e-rickshaws). Except services supplied
through an electronic commerce operator covered u/s 9(5).

Note:

Hiring of non-air conditioned contract carriages by firms for transportation of their

employees to and from work

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.

6. Goods transportation services

i. Services by way of transportation of goods
a) by road except the services of— (i) a goods transportation agency; (ii) a courier
agency
b) by inland waterways.
ii. Services by way of transportation by rail or a vessel or by GTA of following items
(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) agricultural produce;
(e) milk, salt and food grain including flours, pulses and rice; and
(f) organic manure.

7. Banking and financial services

i. 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);
 CA Jasmeet Singh 5

(b) inter se sale or purchase of foreign currency amongst banks or authorised dealers
of foreign exchange or amongst banks and such dealers.

Note:

1. Service charges/fees, documentation fees, broking charges, administrative charges,

entry charges or such like fees or charges collected over and above interest on loan,
advance or a deposit are not exempt.
2. Invoice discounting/cheque discounting or any other similar form of discounting →
Exempt
3. Any interest/delayed payment charges charged to clients for delay in payment of
brokerage amount/settlement obligations/margin trading facility: is exempt from
GST.
4. Interest charged on outstanding credit card balances → Taxable
ii. Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account
holders under Pradhan Mantri Jan Dhan Yojana (PMJDY).
iii. Services by an acquiring bank, to any person in relation to settlement of an amount up
to `2,000 in a single transaction transacted through credit card, debit card, charge card
or other payment card service.

8. Business facilitator/correspondent
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) above.
c) business facilitator or a business correspondent to an insurance company in a rural area.

9. Performance by an artist
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 `1,50,000 are exempt from GST.

10. Services by an unincorporated body or a non-profit entity

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 up to an amount of `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.
Note: If amount recovered exceeds 7500 then entire amount shall be taxable.
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11. Tour Operator Services

Services provided by a tour operator shall be exempt from tax, if they are provided:-
A. to a foreign tourist
B. in relation to a tour conducted wholly outside India or Partly in India & Partly Outside India
C. Exemption for tour Partly in India and partly outside India shall be restricted to lower of
following:
𝐓𝐨𝐭𝐚𝐥 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧 𝐜𝐡𝐚𝐫𝐠𝐞𝐝 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐞𝐧𝐭𝐢𝐫𝐞 𝐭𝐨𝐮𝐫
a) 𝐓𝐨𝐭𝐚𝐥 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐝𝐚𝐲𝐬 𝐜𝐨𝐦𝐩𝐫𝐢𝐬𝐢𝐧𝐠 𝐭𝐡𝐞 𝐭𝐨𝐮𝐫
x No. of days for outside India
b) 50% of the total consideration charged for the entire tour

While making the above calculations, an y duration of time equal to or exceeding 12 hours
shall be considered as one full day and any duration of time less than 12 hours shall be taken
as half a day.

12. Other exempt services

A. Services by way of giving on hire (including renting of vehicle):
(a) to a state transport undertaking (STU), a motor vehicle meant to carry more than 12
passengers
(b) to a local authority, an Electrically operated vehicle (EOV) meant to carry more than 12
passengers;
(c) to a goods transport agency, a means of transportation of goods
(d) motor vehicle by a person providing services of transportation of students, faculty and
staff to School.
B. Services by an organiser to any person in respect of a business exhibition held outside India.
C. 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
D. 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.
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