CBIC issues Notifications pursuant to recommendations in 52nd GST Council Meeting

This Tax Alert summarizes recent Notifications issued by Central Board of Indirect Taxes and Customs (CBIC) pursuant to recommendations made in the 52nd Goods and Services Tax (GST) Council Meeting. The same are effective from 20 October 2023.

The highlights are:

• In case where the supplier of passenger transport services by any motor vehicle or rental services of motor vehicles with operator, opts to discharge tax @5%, an additional condition is imposed to restrict input tax credit (ITC) in excess of 5% of the value of input services in the same line of business.
  
  
• Various supplies made by Ministry of Railways (MoR) are made taxable under forward charge to enable them to avail ITC.
  
  
• Refund of unutilized ITC is now restricted to only those construction services of complex, building or a part thereof, which are intended for sale to a buyer and where the amount charged includes the value of land or undivided share of land.
  
  
• Bus operators organised as companies and supplying services through e-commerce operators (ECO) are made liable to pay GST. Earlier, the liability to pay GST was on ECO.
  
  
• A conditional IGST exemption is notified on foreign going vessel converted for a coastal run subject to its reconversion to foreign going vessel within six months.
  

Comments

• It may need to be analyzed whether the applicability of refund eligibility, in cases other than those construction services notified for restriction, is prospective or retrospective.
  
  
• Activities of lottery, betting and gambling have been excluded from the service rate Notification since the same has been classified as actionable claim being goods under GST. Requisite amendments were earlier carried out in goods rate Notification to provide rate of tax on supply of such actionable claims.
  
  
• The GST exemption given to foreign going vessel for coastal run is likely to boost the tourism industry in India.
  
  
• Reduction in rate of GST on molasses may increase the working capital of the sugarcane industry and facilitate faster clearance of dues to farmers.
  
  
• Although tax exemption on various services provided by the Ministry of Railways have been withdrawn, passenger transport services by railways other than in first class or air-conditioned coach continues to be exempt.