Department of Revenue vide notification dated the 31st October, 2023 has issued following clarifications regarding applicability of GST on certain services:
Passenger Transport Service and Renting of Motor Vehicles
The first clarification relates to services in the “same line of business” for passenger transport service and renting of motor vehicles. The GST rate for these services is 5%, with input tax credit available for services in the same line of business. It was clarified that services in the same line of business include transport of passengers and renting of motor vehicles with operators but do not include leasing of motor vehicles without operators. Leasing of motor vehicles without operators attracts GST at the same rate as the supply of motor vehicles.
Reimbursement of Electricity Charges
Concerns were raised about the GST applicability on the reimbursement of electricity charges by real estate companies, malls, and airport operators to their lessees or occupants. The clarification emphasized that when electricity is supplied bundled with renting of immovable property or maintenance of premises, it forms a part of a composite supply and is taxed accordingly. The principal supply, in this case, is renting of immovable property or maintenance, and the GST rate for that supply applies.
Job Work for Processing Barley into Malted Barley
This clarification addressed the GST rate for job work services related to the conversion of barley into malt. The GST rate for job work services in relation to food and food products is 5%, and the clarification made it clear that malt is considered a food product, regardless of its end use. Therefore, job work services for the conversion of barley into malt attract a 5% GST rate.
District Mineral Foundations Trusts (DMFTs)
DMFTs, set up by State Governments to benefit areas affected by mining operations, were in question regarding their eligibility for GST exemptions. The clarification affirmed that DMFTs perform activities similar to those listed in the Constitution’s Eleventh and Twelfth Schedules. Their services are provided free of charge to beneficiaries, making DMFTs eligible for the same GST exemptions as other Governmental Authorities.
Supply of Pure Services and Composite Supplies for CPWD
The final clarification concerns the supply of pure services and composite supplies, specifically in the field of horticulture and horticulture works. These services, where the value of goods constitutes no more than 25% of the total value of supply, are exempt from GST when provided to CPWD (Central Public Works Department). This exemption is in line with the activities entrusted to Panchayats and Municipalities as specified in the Constitution.