GST on Construction Industry
Is Factory License mandatory for MSME sector?
FACTORY LICENSE:
“Factory” means any premises including the precincts thereof—
- whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
- whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,
As per the above provisions, the factory license is mandatory when the employees count increased to 10 / 20 as per the above specifications.
However, as per notification no 412 dated 25th July 1991 issued by the Ministry of Industry [Department of Industrial Development], the licensing for the manufacture of the schedule III products is not compulsory for the small-scale sector (Industry in which investment in plant & Machinery does not exceed three crore rupees). The relevant list of the items is given below.
Moreover, vide notification dated 4(1)/92 – SSI issued by the Ministry of Industry [Department of Industrial Development], It is further clarified that any item which is compulsorily licensable and is reserved for exclusive manufacture in the small scale sector, will not require a license even if the number of employees is more than 50/100 with/without the aid of power.
The list of the item reserved for Small Scale Industries covered in the above-said paragraph are as follows which is not require Factory License: [ Few Lists added for reference ]
319911 Writing inks and fountain pen inks
387101 Ballpoint pens
387103 Fountain pens
387104 Pen nibs
387105 Fountain pens and ball pens components excluding metallic tips
387201 Pencils
387401 Hand stapling machine
387501 Paper pins
387601 Carbon paper
38760210 Typewriter ribbon for mechanical typewriters
387901 Hand numbering machines
387903 Pencil sharpeners
387907 Pen holders.
303843 Pencil boxes
324902 Chalk crayons including tailors chalk
260103 Cotton socks
260203 Woollen socks
260310 Synthetic knitted socks
301201 shoes
291101 leather shoes
30392801 Bags
Note:
As per the above notification, the definition of the small scale industry is an industrial undertaking in which the investment in fixed assets in plant and machinery, whether held on ownership terms or on lease or on hire purchase, does not exceed rupees three crores and ancillary industrial undertaking means an industrial undertaking which is engaged or is proposed to be engaged in the manufacturing or production of parts components, sub-assemblies, tooling for intermediates or the rendering of services, and undertaking supplies or proposes or supply or renders no more than fifty percent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery, whether held on ownership terms or on lease or on hire purchase, does not exceed rupees three cores.
CONSOLIDATED GST RATE NOTIFICATION FOR CONSTRUCTION INDUSTRY FROM 2017 TO 2021
ENTIRE GST RATE AMEDNMENT HAS BEEN CONSIDERED FOR CONSTRUCTION INDUSTRY FOR THE PERIOD 2017 TO 2021
PRINICIPAL NOTIFICATION NUMBER 11 / 2017 DT: 28TH JUNE 2017:
In exercise of the powers conferred by sub-section (1), sub-section (3) and sub-section (4) [INSERTED VIA NOTIFICATION NO.03/2019 DT: 29TH MARCH 2019] of section 9, sub-section (1) of section 11, sub-section (5) of section 15, sub-section (1) of section 16 and section 148 [INSERTED VIA NOTIFICATION NO.03/2019 DT: 29TH MARCH 2019] of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:-
NOTIFICATION NO.11/2017, SERIAL NO.3 – CONSTRUCTION SERVICE
| DESCRIPTION OF SERVICE | RATE PERCENT | CONDITION |
| (3) | (4) | (5) |
| CHAPTER NO: 9 ALL SERVICES – SECTION NO. 5 – CONSTRUCTION SERVICE | ||
| HEADING NO: 9954 – CONSTRUCTION SERVICE | ||
| | | |
| (ia) Construction of residential apartments other than affordable residential apartments by a promoter in an RREP which commences on or after 1 st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) NEWLY ADDED BY ISSUE NOTIFICATION NO.03/2019 DT: 29TH MAR 2019. | 3.75 | |
| (ib) Construction of commercial apartments (shops, offices, godowns etc.) by a promoter in an RREP which commences on or after 1 st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) NEWLY ADDED BY ISSUE NOTIFICATION NO.03/2019 DT: 29TH MAR 2019. | 3.75 | |
| (ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, which commences on or after 1 st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) NEWLY ADDED BY ISSUE NOTIFICATION NO.03/2019 DT: 29TH MAR 2019. | 0.75 | |
| (id) Construction of residential apartments other than affordable residential apartments by a promoter in a REP other than a RREP which commences on or after 1 st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) NEWLY ADDED BY ISSUE NOTIFICATION NO.03/2019 DT: 29TH MAR 2019. | 3.75 | |
| (ie) Construction of an apartment in an ongoing project under any of the schemes specified in sub-item (b), sub-item (c), subitem (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the Table, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item. NEWLY ADDED BY ISSUE NOTIFICATION NO.03/2019 DT: 29TH MAR 2019. | 6 | Provided that in case of ongoing project, the registered person shall exercise one-time option in the Form at Annexure IV to pay central tax on construction of apartments in a project at the rates as specified for item (ie) or (if), as the case may be, by the 20th of May, 2019; Provided also that where the option is not exercised in Form at annexure IV by the 20th of May, 2019, option to pay tax at the rates as applicable to item (i) or (ia) or (ib) or (ic) or (id) above, as the case may be, shall be deemed to have been exercised; Provided also that invoices for supply of the service can be issued during the period from 1st April 2019 to 20th May 2019 before exercising the option, but such invoices shall be in accordance with the option to be exercised.; |
| (if) Construction of a complex, building, civil structure or a part thereof, including,- (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) above intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation. -For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry. (Provisions of paragraph 2 of this notification shall apply for valuation of this service NEWLY ADDED BY ISSUE NOTIFICATION NO.03/2019 DT: 29TH MAR 2019. | 9 | |
| (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority, Central Government, State Government, Union territory, a local authority | 6 | |
| (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and 6 – 2 Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above [ ADDED VIA NOTIFICATION NO. 3/2019 DT: 29TH MAR 2019] supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) a road, bridge, tunnel, or terminal for road transportation for use by general public; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; (c) a civil structure or any other original works pertaining to the “In-situ rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; a civil structure or any other original works pertaining to the “ln-situ redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban) [ Added via Notification No. 1/2018 DT: 25TH JAN 2018] (d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban) (db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban) [ Added via Notification No. 1/2018 DT: 25TH JAN 2018] (e) a pollution control or effluent treatment plant, except located as a part of a factory; or (f) a structure meant for funeral, burial or cremation of deceased Provided that during the period beginning from the 14 th June, 2021 and ending with the 30th September, 2021, the central tax on service of description as specified in clause (f), shall, irrespective of rate specified in column (4), be levied at the rate of 2.5 per cent. [Added Via Notification No.04/2021 DT:14th Jun 2021] (g) a building owned by an entity registered under section 12AA or 12AB [Added Via Notification No. 06/201 DT: 30.09.21 ] of the Income Tax Act, 1961 (43 of 1961), which is used for carrying out the activities of providing, centralised cooking or distribution, for mid-day meals under the mid-day meal scheme sponsored by the Central Government, State Government, Union territory or local authorities. [ Added via Notification No. 1/2018 DT: 25TH JAN 2018] NEWLY ADDED BY ISSUE NOTIFICATION NO.20/2017 DT: 22ND AUG 2017. | 6 | NIL |
| (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above [ ADDED VIA NOTIFICATION NO. 3/2019 DT: 29TH MAR 2019] supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, including monorail and metro; [ Added via Notification No. 1/2018 DT: 25TH JAN 2018] (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved 6 – 3 by the competent authority under- (1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (da) low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017 [ Added via Notification No. 1/2018 DT: 25TH JAN 2018] (e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or (f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages. NEWLY ADDED BY ISSUE NOTIFICATION NO.20/2017 DT: 22ND AUG 2017. | 6 | NIL |
| (va) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of affordable residential apartments covered by sub- clause (a) of clause (xvi) of paragraph 4 below, in a project which commences on or after 1 st April, 2019, or in an ongoing project in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if), as the case may be, in the manner prescribed therein, | 6 | Provided that carpet area of the affordable residential apartments as specified in the entry in column (3) relating to this item, is not less than 50 per cent. of the total carpet area of all the apartments in the project; Provided also that for the purpose of determining whether the apartments at the time of supply of the service are affordable residential apartments covered by subclause (a) of clause (xvi) of paragraph 4 below or not, value of the apartments shall be the value of similar apartments booked nearest to the date of signing of the contract for supply of the service specified in the entry in column (3) relating to this item; Provided also that in case it finally turns out that the carpet area of the affordable residential apartments booked or sold before or after completion, for which gross amount actually charged was forty-five lakhs rupees or less and the actual carpet area was within the limits prescribed in sub- clause (a) of clause (xvi) of paragraph 4 below, was less than 50 per cent. of the total carpet area of all the apartments in the project, the recipient of the service, that is, the promoter shall be liable to pay such amount of tax on reverse charge basis as is equal to the difference between the tax payable on the service at the applicable rate but for the rate prescribed herein and the tax actually paid at the rate prescribed herein |
| (vi) Services provided to the Central Government, State Government, Union Territory, a local authority or a | 6 | |
| (vii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75per cent. of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, | 2.5 | |
| (viii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services, in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles from the nearest point of the appropriate base line. NEWLY ADDED BY ISSUE NOTIFICATION NO.31/2017 DT: 13th OCT 2017. | 6 | |
| (ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority | 6 | |
| (x) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, | 2.5 | |
| (xi) Services by way of house-keeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under subsection (1) of section 22 of the Central Goods and Services Tax Act, 2017. NEWLY ADDED BY ISSUE NOTIFICATION NO.1/2018 DT: 25th JAN 2018. | 2.5 | Provided that credit of input tax charged on goods and services has not been taken [Please refer to Explanation no. (iv)] |
| (xii) Construction services other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv), (v), (va), (vi), (vii), (viii), (ix), (x) and (xi) above and serial number 38 below [ADDED VIA NOTIFICATION NO.27/2018 DT: 31ST DEC 2018] | 9 | NIL |
| SERIAL NUMBER: 38 HEADING 9954 OR 9983 OR 9987 Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of following, – (a) Bio-gas plant (b) Solar power based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants / devices (f) Ocean waves/tidal waves energy devices/plants Explanation:- This entry shall be read in conjunction with serial number 234 of Schedule I of the notification No. 1/2017- Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 673(E) dated 28th June, 2017. [ADDED VIA NOTIFICATION NO.27/2018 DT: 31ST DEC 2018] | 9 | NIL |
Notification No.17/2021 – CT – Rate DT:18.11.2021. W.E.F 1st Jan 2022
Section 9(5) – Tax Liability on E-Commerce Operator
Section 9(5) – GST LIABILITY – E-COMMERECE OPERATOR:
CONSOLIDATED NOTIFICATION
Section 9 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Levy and Collection”,
Section 9 (5) The Government may, on the recommendations of the Council, by notification, [ Refer Notification No.17/2017] specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
Under Principal Notification No.17/2017 – CT Rate, the following of categories of service, the tax on Intra-State supplies shall be paid by the Electronic Commerce Operator [ E-Comm Operator].
Recent Amended NOTIFICATION NO.17/2021 – 18TH NOVEMBER 2021 [ AMENDED PRINCIPAL NOTIFICATION NO.17/2017 AND FURTHER AMENDMEND NOTIFICATION NO.23/2017]:
In exercise of the powers conferred by sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies that in case of the following categories of services, the tax on intra-State supplies shall be paid by the electronic commerce operator –
i. services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motor cycle, omnibus or any other motor vehicle;
ii. services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act.
iii. services by way of house-keeping, such as plumbing, carpentering etc, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act. [ Added via notification no.23/2017 – 22nd August 2017 ]
iv. supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises. [ Added via notification no.17/2021 – 18th November 2021 ]
Explanation. – For the purposes of this notification, –
a. “radio taxi” means a taxi including a radio cab, by whatever name called, which is in twoway radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS);
b. “maxicab”, “motorcab” and “motor cycle” shall have the same meanings as assigned to them respectively in clauses (22), (25) and (26) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988), the words, brackets, numbers and figures ,“, motor cycle, motor vehicle and omnibus shall have the same meanings as assigned to them respectively in clauses (22), (25), (27), (28) and (29) of section 2 of the Motor Vehicle Act, 1988 (59 of 1988). [Added via notification no.17/2021 – 18th November 2021].
c. specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent [ Added via notification no.17/2021 – 18th November 2021 ]
This notification shall come into force with effect from the 1st day of January 2022.
CA Manimaran Kathiresan
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3.11PLACE OF SUPPLY
Last week we have gone-through overview of Place of Supply under GST. Read Part 9 of Place of Supply under GST, Please go through. Part Link:
https://wordpress.com/read/blogs/170704436/posts/744
DETERMINATION OF PLACE OF SUPPLY OF SERVICES
Let’s proceed with the provisions to determine the place of supply of services where the location of the supplier or that of the recipient is outside India.
c) Admission to/ Organising an event:-
- Services provided by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event
- A celebration, conference, fair, exhibition or similar events
- Services ancillary to such admission or organization
Determination of Place of supply:
- The place of supply of such services shall be the place where the event is actually held.
- If the services are supplied in more than one location which includes taxable and non-taxable territory, then the place of supply in all such situations shall be the location in the taxable territory.
- If any services are supplied in more than one State or Union territory, then the place of supply of such services shall be proportionately taken in each States or Union territories. And the value of such supplies specific to each State or Union territory shall be taken proportionately according to the terms of the contract. In case, there is no such contract, then the value of such services are determined as per the rules set.
Example:
- Ms. Anna from Pitsburg comes to Mumbai to watch IPL Match. The place of supply for admission services is Mumbai which is location of the event.
- Zinger Ltd from India organised a national medical conference at Singapore. The place of supply for organising the event is Singapore which is the location of the event.
- A musical tour is organised Mumbai and Washington. The place of supply will be Mumbai. Since, immovable properties are located in more than one location including a location in taxable territory, the place of supply will be the location in taxable territory, Mumbai.
d) Financial Services:
(a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders;
(b) intermediary services;
(c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month.
Determination of Place of Supply:
The place of supply of such services shall be the location of the supplier of services.
Example:
1) ICICI Bank of Mumbai (Maharashtra) provides services to the customers of New York for operating the NRE and NRO account and charges annual account maintenance charges, the place of supply shall be Maharashtra.
2) Mr. Jey hires a yacht service at Japan for his family on vacation. The place of supply shall be Japan.
E) Transport of Goods:-
The supply of services transportation of goods, other than by way of mail or courier.
Determination of Place of Supply:
The place of supply of such services shall be the location of the destination of services.
Example:
Zed ltd of Kolkatta, WestBengal transports goods from West Bengal to Cambodia through a shipping transport company. The place of supply is Cambodia which is the destination of goods
f) Passenger travel Services:
The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey.
Example:
Mrs. Divya travels from Canada to India to visit her family in India. The place of supply shall be Canada since it is where she starts her journey.
g) On board a Conveyance:-
The services provided on board a conveyance during the course of a passenger transport services. This includes those services that are intended to be wholly or substantially consumed while on board.
Determination of Place of supply:
The place of supply of such service shall be the first scheduled point of departure of that conveyance for the journey
Example:
Mr. Ajay Consumes food and beverage onboard his flight journey from Delhi, India to London. The place of supply shall be Delhi.
h) OIDAR Services:
The supply of online information and database access or retrieval services.
The person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non-contradictory conditions are satisfied,
Conditions:
a) The location of address presented by the recipient of services through internet is in the taxable territory;
b) The credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;
c) The billing address of the recipient of services is in the taxable territory;
d) The internet protocol address of the device used by the recipient of services is in the taxable territory; (e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;
f) The country code of the subscriber identity module card used by the recipient of services is of taxable territory;
g) The location of the fixed land line through which the service is received by the recipient is in the taxable territory.
Determination of place of supply:
The place of supply of online information and database access or retrieval services shall be the location of the recipient of services.
Example:
- Miss. Prashitha purchases and downloads story books to her tablet from Goodreads ltd which provides e-book services by way of online applications. The Place of supply shall be the location of the recipient which is Coimbatore (Tamilnadu).
- Mr. Harsha from Pune (Maharashtra) utilises data digital starage services from Giga Pvt Ltd, Italy. The place of supply of such service is Maharashtra.
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2.11 SCOPE OF SUPPLY
SCOPE OF SUPPLY SERIES – PART 11
Last week we have gone-through the several topic SCHEDULE II services under GST. Read Part 10 of Scope of Supply under GST, in the following link:
https://wordpress.com/read/blogs/170704436/posts/739
In this article we shall see the following entries which are to be treated as supply of service in detail:
- agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
- transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration
- Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act:
Under this scope, following activities are included:
- Demurrage charges for not clearing goods within prescribed period.
- Cancellation charges charged by Hotel and airlines.
- Liquidated damages recovered by Builders and Contractors.
- Non-Compete fees payable for agreeing not to compete for particular period.
- Forfeiture of deposit or advance as penalty ( Like quality, late delivery, violation of any terms of contract)
- Penalty for breach of contract.
For example Refundable security deposit is not taxable, however if deposit is forfeited then it would be taxable.
Non-competent fee under Income tax act has been specifically included as business income. The same is also liable to GST.
If an employee leave job without giving required notice, Notice pay is recovered from employee. On such amount GST has to be charged and paid by the employer. This is actually supply of services of tolerating an act or a situation provided by employer to employee.
- Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration
Transfer of Right to use goods for cash, deferred payment or valuable consideration is considered supply of services under Schedule II.
There are two case laws involved under this entry
- M/s. Abbott Healthcare Pvt. Ltd. (GST AAR Kerala)
The issue involved in this case is whether the placement of specified medical instruments to un-related customers like hospitals, labs etc, for their use without any consideration, for a specific period constitute supply.
The Hon’ble AAR of Kerala vides Advance Ruling Order No. KER/ 15 /2018 dated September 26, 2018 stated that the supply of instrument and reagent is naturally bundled and becomes a composite supply. As supply of instrument is a onetime activity and supply of reagent is a continuous activity, till the termination of the agreement. This transaction being a composite supply, the applicable tax rate is the tax rate of instrument, which is the principal supply.
The placement of specified medical instruments to unrelated customers like hospitals, labs etc, for their use without any consideration, against an agreement containing minimum purchase obligation of products like reagents, calibrators, disposals etc for a specific period constitute composite supply.
- M/S Ishan resins & Paints Limited (GST ARR WEST BENGAL)
The Applicant intends to lease trucks or tankers without operator to goods transport agencies (hereinafter called “GTA”) or any other persons. The Applicant seeks a ruling whether supply of services by way of leasing of goods transport vehicles without operators to GTA would be exempt
The Applicant intends to lease out vehicles like trucks, tankers etc. that are designed to transport goods. The control and possession of the vehicle will be transferred to the lessee, who will engage operator and bear the cost of repair, insurance etc. It is, therefore, not classifiable under SAC 9966, which is restricted to rental services of transport vehicles with operator
The service is classifiable under SAC 997311 as leasing or rental services concerning transport equipment without operator. It amounts to the transfer of the right to use the goods
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1.11 INPUT TAX CREDIT UNDER GST
INPUT TAX CREDIT SERIES – PART 10
Last week we have gone through manner of claiming GST. Read the Part 10 of ITC under GST. Please go through the link below
https://gstindiadaily.wordpress.com/wp-admin/post.php?post=736&action=edit
Notifications pertaining to Input Tax Credit under GST
In this week, we will see some matters that are mentioned in the notifications related to ITC of GST.
Notification No.49/2019 – Central Tax
What is this about?
Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes, the details of which have been uploaded by the suppliers in GSTR 1.
What is the problem with it?
Till date we used to calculate the input tax credit as the sum of total taxes paid on the purchase of the goods and services after excluding the blocked credit irrespective of the fact that the said invoices have been uploaded by the supplier or not.
With effect from the date of this notification, the government has put a maximum cap of 20% on the credit in respect of the invoices which are not uploaded by the suppliers.
Input Tax Credit to be availed cannot be more than
- 100% of eligible ITC appearing in GSTR 2A and;
- 20% of eligible ITC appearing in GSTR 2A in respect of invoices or debit notes not reflecting in GSTR 2A
Total of the above two should not exceed total of ITC available as per actual invoices received during the period.
This can be understood clearly with the help of an example below
Example – 1
Total credit on the purchase of the goods and services ₹1,000/-
Suppliers have uploaded the invoices in respect of credit of ₹800/-
Suppliers have not uploaded the invoices in respect of credit of ₹200/-
Before this notification we can utilise the total input credit of 100 whereas the same will be restricted to ₹960 ( 800 + 20% of 800) after the amendment.
Example – 2
Total credit on the purchase of the goods and services ₹1,000/-
Suppliers have uploaded the invoices in respect of credit of ₹200/-
Suppliers have not uploaded the invoices in respect of credit of ₹800/-
In this example, we used to utilise total 1,000 as ITC before the amendment and it will be restricted to ₹240 (200 + 20% of 200) after the amendment.
CBIC has further notified on 1st January 2020 that the provisional input tax credit shall be reduced from 20% to 10% due to which total ITC that can be claimed in GSTR 3B is 110% of the eligible ITC appearing in the GSTR 2A of the particular period. Restriction of 20% was applicable from 9 October 2019 to 31 December 2019.
STAY TUNED TO THE RIDE OF GST WAVE:
FEEDBACK / QUERIES:
Watch out this space / follow this blog for more latest updates on GST in India. Write back to mani@gstindiadaily.com for customized solutions and services.
THANKS
MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY )
GST India Daily 