\ W’Smart |} Academy Think GST...! CA|CMA|CS iets Sir... A MA FINAL DT Amendments Applicable For MAY / NOV 2025 EXAMS or MY Carel Marelacele| www.vsmartacademy.com—= Index = Concept of Supply 1 Amendment in Clarification i) Clarification on the taxability of ESOP/ESPP/RSU provided by a company to its 1 ‘employees through its overseas holding company [Cir. No.213/07/2024 ] ii) |larification on whether GST is payable by insurance company on salvage/ wreck lvalue earmarked in the claim assessment of the damage caused to the motor 1 lvehicle [cir. No.218/09/2024 ] Applicability of GST on Preferential Location Charges (PLC) collected along with consideration for sale/ transfer of residential / commercial properties 2 (Cir. No. 234/28/2024) 2. | Reverse Charge Mechanism 3 Amendment in Notification i) [RCM tn case of Supply of Goods 3 ii) | RCM in Case of supply of services ~ Entry SAB :~ Renting of any immovable property other than residential dwelling 3 3. | Exemption From GST 4 Amendment in Notification Existing Exemption Amended i) | Si.No, 12 :- Renting of Residential Owelling 4 Si.No. 66 [Cir No. 234/28/2024] :~ Education & Training 8 St. No.71: Training Service under Deen Dayal Upadhyaya Grameen Kaushalya Yojana 10 Sr. No. 69 :~ Service by NSDC etc. u Exemption Newly Added 1) | Si.No. 12A with Cir No. 228/ 22/2024 :- Accommodation services 4 ii) | Sino. 66A [Cir No. 234/28/2024] :- Affiliation Services by Educational 8 Boards or Councils to Government-Controlled Schools iii) | Si.No. 9€ : Certain services provided by Indian Railways 9 iv) | Si.No. 9F : Services provided by one zone/ division under Ministry of Railways 9 v) | Si.No. 9G : Services provided by Special Purpose Vehicles (SPVs) to Ministry of 9 Railways vi) | Si.No. 25A : Ancillary Services in Electricity Transmission & Distribution 9 lvii)| Si.No. 44A : Research & Development Services Funded by Govt Entities & Notified 9 Institutions lviit) Si.No.36A: Re-Insurance Services 10 ix) | Si.No.10L: Import of services by Foreign Airline Establishment 10Amendment in Clarification 1) ]STA with cargo handline services eg. packing charges, loading, unloading " charges etc. (Cir, No. 234/28/2024) ii) | Clarification on taxability of transaction of providing loan by an overseas " affiliate to its Indian affiliate or by a person to a related person (Cir. No. 218/12/2024 dt 26.06.24):- ii) | GST on statutory collections made by Real Estate Regulatory Authority (RERA) 42 [cir. No. 228/22/2024] Time of Supply 13 ‘Amendment in Clarification i) [Clarification on TOS for payment of GST on spectrum usage services when payments 13 are made in instalments by telecom operators (Cir, No. 222/16/2024) ii [Slarieation on TOS of services of construction of road and maintenance thereof of B National Highway Projects of National Highways Authority of India (NHAl) in Hybrid Annuity Mode (HAM) model i.e. (Circular No. 221/15/2024):- Value of Supply 14 ‘Amendment In Rule 1) [Rute 28(2) : Value of supply of goods or services or both between distinct or related 14 persons, other than through an agent ‘Amendment in Clarification ifi)[ Clarification on taxability & valuation of supply of services of providing corporate lguarantee between related persons based on amended provisions 14 (Cir. No. 225/19/2024 ) iy)|Clarification on valuation of supply of import of services by a related person where |ecipient is eligible to full ITC (Cir.No. 210/4/2024) 16 vi) Clarification on availability of ITC for warranty replacement of parts and repair 17 services during warranty period [Cir. No. 195/07/2023 ][ Cir. No. 216/10/2024] v) [Clarification on the requirement of reversal of ITC for the portion of premium for life insurance policies which is not included in taxable value (Cir. No. 214/8/2024 ) 18 1) Mechanism for providing evidence of compliance of conditions of Sec 18(3)(b)(W) by 18 suppliers (Cir. No.-212/6/2024 dt. 26/06/24) __, [Whether GST is applicable on incentive amount shared by acquiring banks with ii) other stakeholders in the digital payment ecosystem under the notified Incentive 18 [Scheme for promotion of RuPay Debit Cards & low value BHIM-UPI transactions (Cir. No. 28/22/2024) Input Tax Credit 19 ‘Amendment in Section i) | Newly added Subsec - Sec 16(5) & 16(6) :~ Eligibility & Conditions of ITC 49 ‘Amendment in Rule ii) | Rute 36(3) & (4) : Documentary requirements and conditions for claiming ITC 21Amendment in Clarification {) |Clariication on time timit for availing ITC u/s 16(4) for RCM supplies received from URPs 2 & tax paid under RCM (Cir.No. 211/5/2024 ) ii] Avattabtty of ITC i respect of Demo Vehicles purchase by dealer from manufacturer 2 (Circular no. 231/25/2024):- jii)Clarification on entitlement of ITC by insurance co, on expenses incurred for repair of 23 ‘motor vehicles in case of reimbursement mode of insurance claim settlement (cir. No. 217/11/2024), jy| Clarification on availability of ITC on ducts & manholes used in the network of optical 2 iv 4 fiber cables (OFCs) u/s 17(5) (Cir. No. 219/13/2024) Place of Supply 25 Amendment in Clarification i) | Clarification on sec 10(1)(ca) of GST Act on POS of goods to URPs (Cir.No. 209/3/2024 ) 25 ji) | Clarification on POS applicable for custodial services provided by banks to Foreign 26 Portfolio Investors (FPIs) (Circular No.220/14/2024) Clarification for advertising services provided by Indian advertising companies/agencies | 96 to foreign clients (Circular No. 230/24/2024) iv) | Clarification on POS of data hosting services provided by service providers located in Indi 27 to cloud computing service providers located outside India (Cir.No. 232/26/2024)Ce > Clarification on the taxability of ESOP/ESPP/RSU provided by a company to its employees through its overseas holding company [Cir. No.213/07/2024 ] Facts:~ 1) Indian companies offer Employee Stock Option Plan (ESOP)/Employee Stock Purchase Plan (ESPP) /Restricted Stock Unit (RSU) options of their foreign holding company to its employees as per the employment contract. 2) Upon employees exercising these options, the foreign holding company directly allots shares to the employees, and the cost is reimbursed by the Indian subsidiary to the foreign holding company. Issue:~ Whether these transactions should be considered as import of financial services and thus be liable for GST under RCM? Clarification: > ESOP/ESPP/RSU is a part of employees remuneration as per their contract & thus, it is not a supply as per paral of Schedule itt > Securities/shares are neither goods nor services under the GST law & thus, it sale or purchase is not a supply. > Thus, the reimbursement from the Indian subsidiary to the foreign holding company, when done on a cost- to-cost basis, is not subject to GST. 2 However, if any additional fee, markup, commission, etc is charged by foreign holding company from the domestic subsidiary for such issuance , it will be considered as a supply of services of facilitating the transaction in securities and GST will be levied on the additional amount (being import of services) under reverse charge. Case Study:- ABC Tech Pvt. Ltd., an Indian subsidiary of Global Tech Inc., a US-based company, offers its employees ESOPs as part of their compensation package. When an employee decides to exercise their stock options, Global Tech Inc. directly transfers the shares to the employee. ABC Tech Pvt. Ltd. reimburses Global Tech Inc. for the cost of these shares ona cost-to-cost basis. Are ESOP/ESPP/RSU transactions considered as supply of goods or services under GST? Hint:- No, ESOP/ESPP/RSU transactions are not considered as supply of goods or services under GST. Securities/ shares are neither goods nor services as per the definitions in the GST Act. Clarification on whether GST is payable by insurance company on salvage/ wreck value earmarked in the claim assessment of the damage caused to the motor vehicle [cir No.21s/09/2024 ] Facts: 2 Insurance company insure the vehicles for any damages & in return, charge premium from owner of vehicle. 2 The responsibility of the insurance company is to either repair the damaged vehicle or compensate the insured as per the terms of the insurance policy. What is an GST impact if, a) Deduction of Salvage Value V’Smart Academy www.vsmartacademy.com, CAVishal Bhattad 09850850800b) Full Insured Declared Value (IDV) Settlement without deducting Salvage Value Clarification: a) Deduction of Salvage Value: When the claim is settled after deducting the salvage value, the ownership of the salvage remains with the insured. The salvage does not become the property of the insurance Co., and the deduction of salvage value from the claim amount is not considered a supply, hence insurance company is not liableto pay GST onthe same. b) Full Insured Declared Value (IDV) Settlement: > If the insurance contract stipulates settlement on full IDV without deducting salvage value/wrickage (as per the contract), the salvage becomes the property of the insurance Co. after settling the full claim amount. > Thus, insurance companyis liable to discharge GST on supply ofthe salvage to the salvage buyer. > Allowing choice of location of apartment is integral part of supply of construction services. > Ibis clarified that location charges or PLC paid along with consideration for the construction services of residential /commercial/ industrial complex forms part of composite supply. > The supply of construction services is main service & PLC is naturally bundled with it. > It is eligible for same tax treatment as the main supply of construction service before issuance of completion certificate. CAVishal Bhattad (09850850800 www.vsmartacademy.com rt AcademyREVERSE CHARGE & ECO sm under section 9(3) of the CGST Act/ es notified under reverse charge mechat section 5(3) of the IGST Act are as follow: Liability under RCM for Supply of Goods (w/n 4/2017 centrat Tax(Rate)) Supplier of goods Deane sy . . 8. | Metal Seray JAny unregistered person] Any registered person Diitereree | eststered vy registered Ps 5AB| Renting of any immovable property other than residential dwelling Services 100 % Liability Service by way of Renting of any immovable property other reerrgrremeey than residential dwelling hes @ © person Any unregistered person | Any registered person ls.no.| Description ofsupply of Goods Reverse Charge Any registered Newly added or updated questions from questionnaire ‘CCP 03.03.13.00 State, with reason, the person liable to pay GST in each of following independent cases:~ Assume recipientis located in taxableterritory. (vi) Mr. Chirag who is not registered under GST rents out its commercial property (non-residential) to ABC Pvt. Ltd. (R.P.) for the purpose of setting up their office. Answer:~ ((vi)| Legal provision: As per section 9(3) of CGST Act, ifservice of renting of immovable property other than residential dwelling is provided by the any unregistered person to any registered person located in the taxable territory, then GSTis payable by recipient under reverse charge. Discussion & Conclusion: 2 In the given case, Mr. Chirag who is unregistered person and provides services of renting of immovable property for commercial purposes to ABC Pvt. Ltd. (R.P.) > Thus ABC Pvt. Ltd. is liable to pay GST under Reverse charge mechanism. V'Smart Academy wwwivsmertacademy.com CAVishal Bhattad (09850850800EXEMPTIONS FROM GST INo. 12 | Renting of Residential Dwelling Exemption | Services by way of renting of residential dwelling for use as residence except where the residential dwellingis rented to a registered person Comment:~ This service is exempt when recipient is unregistered person. For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, ~ 'D the registered person is proprietor of a proprietorship concern & rents the residential dwelling in his personal capacity for use as his own residence and > such renting is on his own account and not for the proprietorship concern Explanation 1 Explanation | Nothing contained inthis entry shall apply to- 2 (inserted) a) accommodation services for students in student residences; b) accommodation services provided by Hostels, Camps, Paying Guest accommodations the like. Comment:~ > Student residences refer to accommodations provided to students specifically. It includes student hostels/apartments, university/college dormitories, off-campus student housing & similar living quarters. > Services provided by educational institutions, including housing as composite supply, is exempt from GST, but taxability of such individual service supplied depends on its nature 124 er Supply of accommodation services having value of supply less than or equal to 720,000 per person per month provided that the accommodation service is supplied for a minimum continuous period of 90 days ‘2 VOS exceeds ¥ 20,000 per person per month or ‘> Accommodation services supplied for less than 90 days or > Accommodation services supplied for minimum non-continuous 90 days. . No. 228/22/2024] 1. Whether service of hostel accommodation, service apartments/hotels booked for longer period is a service of renting of residential dwelling for use as residence f exempted under Sl. No. 12? 2.Whether service of hostels for poor & middle-class students run by charitable trusts is exempt? No! applicability: GST liability on certain accommodation services [\ Issue:~‘Dit is not exempt under entry 12 but it will be exempt under entry 12A, if it satisfies the conditions given thereunder. > Also, If VOS of accommodation services supplied between 01.07.2017 to 14.07.2024 was <= %20,000 per person per month & was supplied for a minimum continuous period of 90 days, then GST liability on the same is regularized on'as is where is' basis for such period. > If matters are regularized on ‘as is” or ‘as is, where is basis”, for 2 competing Meaning of Asis Whereis | rates & GST is paid at lower of them, or at nil rate by some suppliers while other Cir No. suppliers have paid at higher rate, ae payment at lower rate shall be treated as tax fully paid for regularized period. ftaxpayers had paid at higher GST rate, they shall not be entitled to any refund, SI.No.12 Renting of Residential Dwelling (RD) - for use as residence Supplier Recepient Taxability Who will pay tax > Any Person| — URP(if use for residence) Exempt - [re + urP] > Any Person cep: RP Taxable | Under RCM recipient (RP) [Rp + uRP] oon is is liable to pay tax = using RD in Personal capacity for own residence - Renting on own account [Accommodation Services (Hostels, residence for student, Camps, Paying Guest Exempt - SL.No.12A, accommodations & the like. ) - Value 20,000 PP/PM for Continuous period of 90 days > Any Person| Any Person [RP + URP] Exempt - [re + urP] When tax payable on accommodation services:- > Value > 20,000 PP/PM or > Supplied for non-continuous period of 90 days > If charges on daily basis & not on monthly basis Renting of Immovable property other than Residential Dwelling (Fully taxable) 2>RP Any Person [RP + URP] Taxable ‘Supplier (FCM) Under RCM recipient (RP)| is liable to pay tax > URP RP Taxable 09850850800 ‘Smart Academy www.vsmartacademy.com, CAVishal BhattadPetree kota tment teeturir A hotel offers accommodation services with a value of supply at 718,000 per person per month. A customer books a room for 95 continuous days. Under the GST law, is this accommodation service subjectto GST? Answer:~ Legal Provision: 2 Accommodation services with a value of supply less than or equal to %20,000 per person per month, provided fora minimum continuous period of 90 days, are exempt from GST. Discussion & Conclusion: > Inthis case, the hotel offers accommodation at 18,000 per person per month, and the customer books the room for 95 continuous days. D Since both conditions are met (value of supply is less than ¥20,000 per person per month and the accommodation is for more than 90 days). Therefore, this serviceis exempt from GST. Roshan(RP) of Bengaluru owns 9 properties in different parts of Karnataka. From the information given below, find out GST payable by him for the quarter ending on 31st March, 20XX. GST rate is 18 per cent (i.e., CGST 9% + SGST 9 %) Municipal tax pertaining to these properties is 44,000. Expenditure is ¢1,32,000. Fire insurance premium paid by Roshan is ¢ 48,000. [CMA Final RTP Dec 18 ‘CA Final RTP Dec 2018-Similar] on repai Particulars Amount. Rent of residential Building | (given on rent to A, a salaried employee & unregistered | —10,00,000 under GST, for his residence) Rent of residential Building Il [given on rent to a bank, registered under GST, for| _ 15,00,000 residence of a branch manager) Rent of vacant plot of Land III (given on rent toa manufacturing company) 8,00,000 Rent of vacant plot of Land lV (given on rent for agriculture purposes) 4,50,000 Rent of residential Building V (given on rent to 8 Ltd., an unregistered person under | 3,00,000 GST, for residence of employees) Rent of commercial Building VI (given on rent to C, who has a sole proprietary business) 1,50,000 Rent of residential building VI (itis situated in residential area but used for commercial| _6,50,000 purposes and it is given on rent on the understanding that the tenant, who is unregistered under GST, can use it for commercial purposes if there is no objection by the municipal corporation) Accomodation of residential building VIll (i.e Greenwood Hostel, given on rent tocollege| 75,000 student for 3 months whose rent is 25,000 per person per month) Accomodation of Students Residence building IX for 60 days, rent is #18,000 per person| 36,000 per month CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart AcademyAnswer:~ Computation of GST of Roshan forthe quarter ending on 31st March, 20XX:~ Particulars Amount (2) Explanation Rent of residential Building | Renting of residential dwelling for use as residence to an unregistered personis exempt. Rent of residential Building It Letting out of residential building for residential purposes to a registered person is liable to GST, but the tax thereon is to be paid by recipient (i.e, bank) under reverse charge. It is not covered under any exemption & hence, taxable. Rent of vacant plot of Land Ill | 8,00,000 (Roshan is RP, hence RCM is not applicable) Rent of vacant plot of Land IV - Letting out of vacant plot for agricultural purposes is exempt. Rent of residential Building V - Letting out of residential building for residential purposes to an unregistered person is exempt. Rent of commercial Building Vil _1,50,000 _| Letting out of commercial property is liable to GST. Rent of residential building vil | 6,50,000 [Letting out of residential property to unregistered person for commercial purposes is chargeable to tax under forward charge. Rent of residential building Vill| 75,000 [Renting of residential dwelling to student is taxable under GST under Entry no 12 & also under Entry no. 12A as value exceeds 20,000 per person per month. Rent of Students Residence | 36,000 _ [Renting of residential dwelling to student is taxable under Building IX GST under Entry no 12 & also under Entry no. 12A as value not exceeding %20,000 per person per month but it is for aperiod of 60 days. Taxable value of supply 17,11,000 CGST @ 9% 1,53,000 SGST @ 9% 1,53,000 Total GST charged by Roshan| 3,06,000 Roshan has paid fire insurance premium and expenditure on repair of buildings. These expenses are not deductible while calculating taxable value of supply. However, input tax credit pertaining to these expenses can be claimed, subject to provision of section 17 of CGST Act read with Rule 42 of CGST Rules. ‘Smart Academy www.vsmartacademy.com CAVishal Bhattad (09850850800Leela tra 8 66 | Education & Training Exemption eons Dyin) Education as a part of an approved vocational education course. Notes:- Approved vocational eduestion courseincludes ‘DApproved Vocational Course: A course by ITI/ ITC affiliated to NCVET or SCVT offering courses intrades notified under the Apprentices Act, 1961. Private ITl = Services given by private ITIs exclusively for trades designated under th Apprentices Act, 1961 are exempt from GST. However, services relating non-designated trade aresubjectto GST. ‘Modular Employable Skill Course (Skills for gainfull employment to school drop-outs, workers etc.): A course approved by NCVET, run by Directorate General of Training, Ministry of Skill Development and Entrepreneurship. (CVE = National Cane for Vocational Edeatonl Training, SCVT~ State Cound for Vocational Training Clarification GST on flying training courses conducted by FTO (Flying training Organizations) approved by the DGCA [Cir.No. 234/28/2024] Education as a part of an approved vocational education course :- Itis clarified that approved flying training courses conducted by Flying training Organizations (FTOs) approved by Directorate General of Civil Aviation (DGCA), wherein the DGCA mandates the requirement of a completion certificate, are exempt. 66A| Affiliation Si Controlled Schools ay ervices by Educational Boards or Councils to Government- Exemption Services of affiliation provided > bya Central or State Educational Board or Council or any other similar body, 2 To a school established, owned or controlled by the CG, SG, UT, LA, Govt. authority or Govt. entity. CBIC Clarification:- GST on Affiliation services provided by Universities to Colleges & Education Board to Schools [Cir. No. 234/28/2024 } 1. | > Universities’ affiliation services to colleges does not involve student admissions or exams. ‘> These services are not exempt from taxes, so an 18% GST applies. 2, | > Affiliation services provided to schools by Education board or Councils does not include student admissions or exams ‘> These services are taxable. V'smart AcademyGovernment Sector 9E Certain services provided by Indian Railways:- Exemption | Services provided by Ministry of Railways (Indian Railways) to individuals by way of- a) Sale of platform tickets; b) Facility of retiring rooms/ waiting rooms; c) Cloak room services; 4) Battery operated car services. oF oo Services provided by one zone/ division under Ministry of Railways Exemption | services provided by one zone/division under Ministry of Railways (Indian eo Railways) to another zone(s)/division(s) under Ministry of Railways (Indian Ges Railways). Analysis: Intra railway transactions between different zones/divisions are exempt. Services provided by Special Purpose Vehicles (SPVs) to Ministry of Railways Exemption | Services provided by Special Purpose Vehicles (SPVs) to Ministry of Railways (Indian Railways) by way of allowing Ministry of Railways (Indian Railways) ‘D to use the infrastructure built & owned by them during the concession period against consideration & services of maintenance supplied by Ministry of Railways (Indian Railways) to SPVs in relation to the said infrastructure built & owned by the SPVs during the concession period against consideration Definition of | A special-purpose vehicle (SPV) is a legal entity that allows multiple investors to Special Purpose) pool their capital and make an investment in a single company. SPVs have multiple lvehicles (SPVs) | use-casesinthe business world. 25A Ancillary Services in Electricity Transmission & Distribution @& Supply of services by way of > providing metering equipment on rent, testing for meters / transformers / capacitor ete., releasing electricity connection, ‘D shifting of meters/service lines, issuing duplicate bills etc., which are incidental or ancillary to the supply of transmission and distribution of electricity provided by electricity transmission and distribution utilities to their consumers. Exemption aaa Research & Development Services Funded by Govt Entities & Notified Institutions Exemption:-Research and development services against consideration received in the form of grants supplied by — (@)a Government Entity; or (0) aresearch association, university, college or other institution, notified u/s 35(1)(j)/ (il) of Income Tax Act, 1961. Proviso:~ Research association, university, college or other institution, notified u/s 35(1)(ti)/ (fi) of income Tax Act, 1961 is so notified at the time of supply of the research and development service. ‘V’Smart Acar wwwivsmertacademy.com CAVishal Bhattad (90985085080071 _| Training Service under Deen Dayal Upadhyaya Grameen Kaushalya Yojana Exemption:~ Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana implemented by the Ministry of Rural Development, Government of india by way of offering skill or vocational training courses certified by the National Council for Vocational Education and Training. CACC Ua cs 36A| Re-Insurance Services Exemption:~ Services by way of reinsurance of the insurance schemes specified in serial number 35 or 36 0r40 Note:- entry no. 36- Life Insurance Services, entry no.40- Insurance Scheme for Government Services, entry no.35 - Specified General Insurance Scheme inclusion of retrocession services in reinsurance. > As per IRDAI (Re-insurance) Regulations, 2018, 'Retrocession' means a re-insurance transaction whereby a part of assumed reinsured risk is further ceded to another Indian Insurer or a CBR (Cross Border Re-insurer). > Thus, reinsurance’ under Sl.No. 36A of exemption notification includes 'retroces: List of Services exempt under IGS 10L | Import of services by Foreign Airline Establishment in’ services. Import of services by an establishment of a foreign company in India, which is an Exemption airline company, from a related person or from any of its other establishments outside India, when made without consideration. CESMnteest na, Explanation | Foreign co. shall have meaning as assigned u/s 2(42) of Companies DAE Act, 2013. Proviso GST at applicable rates is paid by the establishment of foreign airline co. in India on transport of goods & passengers as may be applicable. Proviso Ministry of Civil Aviation certifies that the establishment of foreign co. in India is that of an airline co. which has been designated by foreign govt. under the applicable bilateral air services agreement with India. Proviso Ministry of Civil Aviation certifies that on a reciprocal basis, designated Indian airlines are not subject to levy of similar taxes by whatever name called for the same services appearing under the entry, byGovt. ofthe country designating the foreign airline co. V'smart Academy69 | Service by NSDE Exemption Any services provided by ~ a. the National Skill Development Corporation set up by the Government of India; b. the National Council for Vocational Education and Training; c.an Awarding Body recognized by the National Council for Vocational Education & Training; d. an Assessment Agency recognized by the National Council for Vocational Education and Training; e. a Training Body accredited with an Awarding Body that is recognized by the National Council for Vocational Education and Training, inrelation to- i) the National Skill Development Programme or any other scheme implemented by the National Skill Development Corporation; or it) a vocational skill development course under the National Skill Certification and Monetary Reward ‘Scheme; or iii) any National Skill Qualification Framework aligned qualification or skill in respect of which the National Council for Vocational Education and Training has approved a qualification package. CBIC Clarifications GTA with cargo handline services eg. packing charges, loading, unloading charges etc. (Cir. No. 234/28/2024) > Bundle Invoice: Ancillary/incidental services provided by GTA in the course of transportation of goods byroadis.a composite supply of transport of goods, irrespective of invoicing method used by it. 2 Separate Invoice:~ If such services are not provided in the course of transportation of goods and are invoiced separately, then these services will not be treated as composite supply of transport of goods & taxable individually as cargo handling service Clarification on taxability of transaction of providing loan by an overseas affiliate to its Indian affiliate or by a person to a related person (Cir. No. 218/12/2024 dt 26.06.24):- Issue:-Whether processing fee/ administrative charges/ loan granting charges etc. or interest/discount charged for granting of loan by a person to a related person or by an overseas affiliate to its Indian affiliate is a deemed taxable supply or not u/s 7(1)(c) read with para 2 & 4 of Sch I? Clarification: Supply of |As per sec 7(1)(c) & Para 2 & 4 Sch I, supply of goods &/or services or import of service services between/ from related persons, when made in the course or furtherance of business, shall betreated as supply, even if made without consideration. Exemption | Granting loans/ credit/ advances, for consideration being interest or discount, is exempt. som. CAVishal Bhattad (09850850800Charges 2 Processing fee/service fee/facilitation fee/ loan granting charges/ administrative other than charges is one-time charge to apply for loan to cover administrative cost to process interest/ loan &is non-refundable. discount | These are generally charged by bank/Fl & independent lender for checking financial standing, credibility of applicant, etc. 2 Overseas affiliates or domestic related persons generally do not charge processing fee/ service fee, except interest/discount on loan because they may not require to follow such processes. 2 Even between unrelated parties (bank/ independent lender & borrower), processing fee/ administrative charges/ loan granting charges etc., might not be there or might be waived based on their relations. © Thus, if amount charged except interest/discount are consideration that are liable to Conclusion | 1. 1fconsideration (other than interest/ discount) is not charged from related person, or bi overseas affiliate from Indian party for extending loan/ credit: 2 Theres no supply of service between them u/s7(1) (c) read with para 2&4 of Schl. ‘2 Thereis no question of levy of GST on it by resorting to OMVas perrule 28. 2. If consideration (in addition to interest/ discount) is charged from related person, or by overseas affiliate from Indian party for extending loan/credi 2D Itis a supply of services of processing/ facilitating/ administering, etc. of loan. ‘> Such consideration will be liable to GST. GST on statutory collections made by Real Estate Regulatory Authority (RERA) [Cir. No. 228/22/2024], > RERA is constituted under Real Estate (Regulation & Development) Act, 2016 to regulate real estate development & construction of building entrusted to them under Indian Constitution. > RERAis a governmental authority as per definition in exemption notification. > Thus, statutory collections made by RERA are exempt. CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart AcademyTIME OF SUPPLY “ Clarification on TOS for payment of GST on spectrum usage services when payments are made in instalments by telecom operators (Cir. No. 22/16/2024) Facts:~ Telecom operators bid for spectrum rights from the govt. Service provider is the Govt. of India, land recipient is the telecom operator. GST is paid by the telecom operator on a reverse charge basis. issue :~ Howto determine TOS? \Clarification:- Type of supply: For spectrum allocation services where telecom operators opt for deferred payments, the supply is treated as a continuous supply of service as it is agreed to be continuously provided for more than 3 months with periodic payment obligations. Tax As per sec 31(5)(a), invoices must be issued on or before the due date of payment by invoice: | recepient which is ascertainable fromthe contract. TOS u/s | >If full upfront payment is made by telecom operator, GST is payable when the payment is 13(3): due or made, whicheveris earlier. > For deferred payments, GST is payable as and when each instalment is due or paid, whichever is earlier. Other | This principle also applies to other government-allocated natural resources with similar services:| payment options (i.e. upfront or deferred payments). Clarification on TOS of services of construction of road and maintenance thereof of, National Highway Projects of National Highways Authority of India (NHAL) in Hybrid Annuity Mode (HAM) model i.e. (Cir. No. 221/15/2024):- Nature of | 2 HAM contracts are single agreements covering both construction & O&M of highways HAM along with the required payments for both. Contracts | > Certain portion of Bid Project Cost is received during construction period & remaining| payment through deferred payment (annuity) spread over 15-17 years. > Payment for each instalment is to be made after specified periods, or on completion of an event, as specifiedin the contract. Type This model is covered under ‘continuous supply of services’ TOS as per | 2 If invoices are issued within time, TOS shall arise at the time of issuance of invoice, or sec 13(2) receipt of payments, whichever is earlier, if the invoice is issued on or before specified read with date or date of completion of event specified in contract. sec 31(5) | 2 Ifinvoices are not issued on or before the specified date or completion of event as per contract, TOS shall be earlier of - date of provision of service (i.e. due date of payment) ordate of receipt of payment. Note: Date of provision of service = due date of payment as per contract, as invoice is required to be issued on or before the due date of payment u/s 31(5). Interest. from NH The annuity/instalment payable from NHAI to concessionaire, which may include an |A1| interest component, are included in value & taxable u/s 15(2)(d). V'Smart Academy www.vsmartacademy.com, CAVishal Bhattad 09850850800VALUE OF SUPPLY Rule 28 :- Value of supply of goods or services or both between distinct or related persons, other than through an agent VOS for corporate guarantee (Rule 28(2)) Pee Notwithstanding anything contained in sub-rule (1), the value of supply of services by a supplier to a recipient who is a related person located in India, by way of providing corporate guarantee to any banking company or Fl on behalf\of the said recipient, Newly inserted by} CYC) shall be deemed to be 2.1% of the amount of such guarantee offered per annum, ofMME UES. w.e.f. 26/10/23 ‘>the actual consideration, whichever is higher.” lProviso| Provided that where the recipient is eligible for full ITC, the value declared in| the invoice shall be deemed to be the value of said supply of services. fel lee ey iterates Clarification on taxability & valuation of supply of services of pro} guarantee between related persons based on amended provisions (Cir. No. 225/19/2024) \g corporate 1 |Whether rule 28(2) apply | The supply of corporate guarantees to banks by a supplier for a to corporate guarantees| related recipient was always taxable. issued prior to 26/10/23] > Rule 28(2) (w.e.f. 26/10/23) is just for valuing these taxable or issued pri force? ior but still in| supplies. > Guarantees issued or renewed before this date follow the old Rule 28 for valuation, while those issued or renewed on/after this date follow new sub-rule (2). 2 |VOS of corporate] Value of service of providing a corporate guarantee is based on the guarantee given if loan is} amount guaranteed (i.e. taking on risk of default), not loan partly availed or not| actually disbursedto recipient of corporate guarantee. availed & ITC available:- | > Recipients can avail full ITC regardless of when or how much of the loan is actually disbursed, subject to other specified conditions. 3 [GST on t involves assignment guarantee:~ existing loans which] providing guarantee to bank/Fl, & recipient is related entity for issued corporate| Co./Fl, this activity of takeover is not considered as a service of akeover of/> Supplier of corporate guarantee service is the corporate entity merely an| whom such guaranteeis given. of an already] > If loan issued by banking Co./Fl is taken over by another banking providing a corporate guarantee. ‘> Thus, itdoes not impact GST. CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart Academy2 However, if the takeover of loan is followed/ accompanied by issuance of fresh corporate guarantee or an existing one is renewed, then GST would be payable on thesame. ‘Amount on which GST is payable in case of multiple co-guarantor:~ ‘2 When multiple related entities provide a corporate guarantee, value of service is the sum of actual consideration paid/payable to co- guarantors, ifthis total amount exceeds 1% of guaranteed amount. > If total consideration is less than 1% of guarantee offered, GST is payable by each co-guarantor proportionately on 1% of guaranteed amount. > For example, if co-guarantors A and B guarantee 71 crore equally, each pays GST on 0.5% of the guaranteed amount. If A guarantees 60% and B guarantees 40%, A pays GST on 1% of ¥ 60 lakhs, and 8 01% of 8 40 lakhs. GST under intra-group guarantees: > For domestic corporates issuing intra-group guarantees, GST must be paid under the forward charge mechanism, with an invoice issued bythe supplier to the related recipient u/s 31. 2 If foreign/ overseas entity provides such a guarantee for a related entity in india, GSTis payable under RCM by the Indian related recipient. Frequency of tax payment of tax (i.e. one time or on yearly/ monthly basis for a fixed term of $/10 years as per tenure of loan):~ 2 VOS of providing service of corporate guarantee to a bank/Fl on behalf of a related recipient = 1% of guaranteed amount per annum ortheactual consideration, whichever is higher. 2 For multi-year guarantees, value is 1% of guarantee offered per year multiplied by the number of years, or the actual consideration, whichever is higher. 2 For guarantees of less than a year, valuation is proportionate (e.g., 0.5% for six months) or the actual consideration, whichever is higher. 2 Example: A S-year corporate guarantee is valued at higher of 5% (19% x5 years) of guaranteed amount or the actual consideration, with GST payable on this amount at time of issuance of such guarantee. If year guarantee is renewed annually for S years, GST is payable each year on higher of 1% of the guaranteed amount or the actual consideration in Ist year & on every renewal in subsequent years. Benefit of value declared ininvoice= Vos 2 Proviso to rule 28(2) is inserted to provide benefit in cases involving supply of service of corporate guarantees provided between related persons also, where full ITC is available to recipient. 2 Thus, value declared in invoice shall be deemed to be VOS. Applicability of rule 28(2) for export of services ‘> The retrospectively amended rule 28(2) (w.e.f. 26/10/23) shall not apply if the recipient of corporate guarantee services between related persons is located outside India. Therefore, these provisions do not apply to export of such services. ‘Smart Academy www.vsmartacademy.com, CAVishal Bhattad (09850850800Torche tik ain ABC Pvt. Ltd., an Indian company, provides a corporate guarantee of %15,00,00,000 to a bank on behalf of its related company, XYZ Pvt. Ltd., also located in India. The actual consideration for the guarantee is 22,00,000 per annum. XYZ Pvt. Ltd. is eligible for full Input Tax Credit (ITC). What will be the value of the supply of services for GST purposes, and how much GST will be payable if the applicable GST rate is 18%? Answer:~ Legal Prov jon: DAs per Rule 28(2) of CGST Rules 2017, The value of supply of services by a supplier to a related recipient in India, by providing a corporate guarantee to a bank or financial institution, shall be deemed to be 1% of the guarantee amount per annum or the actual consideration, whichever is higher. 2 Ifthe recipient is eligible for full ITC, the value declared in the invoice shall be deemed to be the value of supply of services. Discussion f Conclusion: D Inthe given case, 1% of the guaranteed amount is 215,00,00,000 * 1% = #15,00,000, which is higher than ‘the actual consideration of €2,00,000 per annum. ‘> Therefore, the deemed value for GST purposes is ¥15,00,000. > However, since XYZ Pvt. Ltd. is ible for full ITC, the value declared in the invoice can be €2,00,000. 2 Hence, GST will be calculated on #2,00,000. The GST payable at 18% is #2,00,000 * 18% = ¥36,000. Inabove case, would your answer differ if recipientis not eligible for full ITC & Guarantees given for 3 years (VOS = 45,00,000[15 Crores X 1% X 3yrs or% 2 Lakhs, WIH]) ii) Guarantee is given for 4 months (VOS=5,00,000[15 CroresX1%X 4/12 0r%2 Lakhs, WIH]) Clarification on valuation of supply of import of services by a related person where recipient is eligible to full ITC (Cir. No. 210/4/2024):- Issue: 2 Demands are raised on RP in India for tax payable under RCM for activities undertaken by their related persons outside India, even when no consideration is involved, deeming it as supply under para4 of Schl. ‘> Whether there shall be same treatment for foreign entities providing services to related parties in India (where full ITC is available to recipient) as is given to domestic related parties or distinct persons.as per circular 199/11/2023? Legal Provision:- ‘> Theabove transaction is supply as per para 4 of Schl. ‘> For import of services by a RP in India from a related person located outside India, tax is payable by RP under RCM & recipient shall issue self-invoice u/s 31(3)(f). ‘> As per 2nd proviso to Rule 28, the value declared in invoice is deemed to be OMV when recipient is eligible for full ITC. > If services are provided without an invoice, value may be declared as nil i.e. OMV is deemed as Nil. Clarification: This 2nd proviso also applies where services are provided between distinct or related persons, including foreign affiliate providing services to related domestic entity (i.e. import of service). CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart AcademyClarification on availability of ITC for warranty replacement of parts and repair services during warranty period [Cir. No. 195/07/2023 ] 1) 4) What will be the answer if distributor replaces goods/its parts to customer under warranty out of his own stock on behalf of manufacturer & on requisition raised, later gets replenishment of said parts/goods from manufacturer? [Circular No. 216/10/2024 dt. 26.06.24] ‘> The manufacturer provides the said goods/parts to distributor through a delivery challan, without separately charging any consideration at the time of such replenishment. ‘> Thus, no GSTis payable on such replenishment. > Further, no reversal of ITC is required to be made by manufacturer for goods/parts so replenished. 2) | Issue :- Nature of supply of extended warranty in certain cases [Cir. No. 216/10/2024] Clarification: (a) lf customer enters into agreement of extended warranty with supplier of goods at the time of original supply,:- > Consideration for extended warranty becomes part of value of composite supply, p supply being SOG, & GSTis payable accordingly. > If supplier of extended warranty & supplier of goods are different, then extended warranty will betreated asa separate taxable supply of service. ipal Comment:~ Sometimes supplier of goods may bea dealer while supplier of extended warranty may be OEM or 3rd party. Thus, both are different. b) if consumer enters into an agreement of extended warranty at any time after the original supply: Supplier of extended warranty shall treat it as supply of services distinct from original SOG & pay GST accordingly on this service. ‘Smart Academy wwnw.vsmartacademy.com CAVishal Bhattad (09850850800Clarification on the requirement of reversal of ITC for the portion of premium for life insurance policies which is not included in taxable value (Cir. No. 214/8/2024) Facts Whether life insurance premium which is not included in taxable value as per Rule 32(4) will be treated as pertaining to an exempt supply/ non-taxable supply and whether ITC availed for such amount to be reversed or not as per sec 17(1) read with rule 42 & 43? Clarification:- > The amount of premium for taxable life insurance policies, which is not included in taxable value as per rule 32(4), cannot be considered as pertaining to a non-taxable or exempt supply. > Thus, thereis no requirement of reversal of ITC as per sec17(1) & (2) read with rule 42/43 forit. Mechanism for providing evidence of compliance of con suppliers (Cir. No.-212/6/2024) ions of Sec 15(3)(b)(ii) by Issue: There is a need for a mechanism to verify whether ITC attributable to discounts given through tax credit notes (after supply is effected) has been proportionately reversed by recipient, as required by Sec 15(3)(b)(ii), as there is no existing facility for suppliers or tax officers to verify this on common portal. Clarification: Temporary | Until a functionality is available on common portal, suppliers should obtain a certificate Solution to _ | from recipient, issued by a CA or CMA, certifying the proportionate reversal of ITC by verify recipient for credit note issued by supplier. Details in > Details of credit notes and corresponding invoice no. Certificate | > Amount of ITC reversal for each credit note. > Details of FORM GST DRC-03/ return / any other relevant document through which such reversal of ITC is made. Verification of (cA/CMA certificates should include the Unique Document Identification Number Certificate | (YDIN), which can be verified online from ICAl or ICMAI website. Simplified If tax amount (CGST+SGST+IGST+ compensation cess) involved in such discount does Procedure for |not exceed Rs ,00,000 in a F.Y., an undertaking or certificate with above details from ‘Small Amount | recipient can be accepted instead of CA/CMA certificate. ‘Acceptable | CA/CMA certificates or recipient undertakings/certificate will be considered Evidence admissible evidence for compliance with Sec 15(3) (b) (ii). > These shall be produced it if tax officers require it during scrutiny, audits, or investigations, etc. for both current & past periods, ifrequired. Whether GST is applicable on incentive amount shared by acquiring banks with other stakeholders in the digital payment ecosystem under the notified Incentive Scheme for promotion of RuPay Debit Cards & low value BHIM-UPI transactions (Cir. No. 28/22/2024) Clarification | Further sharing ofincentive amount by acquiring bank with other stakeholders, ~ up to the point where the incentive is distributed in the proportion & manner as decided by NPCI in consultation with the participating banks under such notified Incentive Scheme, CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart AcademyINPUT TAX CREDIT Sec 16 :- Eligibility & Conditions of ITC 5.|Extension of _ | Notwithstanding anything contained in sec 16 (4), in respect of an invoice or debit Time limit note for supply of goods or services or both ‘> pertaining to the Financial Years 2017-18, 2018-19, 2019-20 & 2020-21, > the RP shall be entitled to take ITC in any return u/s 39 which is filed upto the 30thNov 2021. 6.| Claiming 1T¢ | Where registration of a RP is cancelled u/s 29 and subsequently the cancellation of . for Invoices | egistrationis revoked Post- ‘> byany order, either u/s 30 or Revocation > pursuant to any order made by the Appellate Authority or the Appellate Tribunal of Registration| orcourtand Cancellation where availment of ITC in respect of an invoice or debit note was not restricted u/s 16(4) on the date of order of cancellation of registration, the said person shall be entitled to take the ITC in respect of such invoice or debit note for supply of goods or services or both, in a returnu/s39,-~ Dee guencs) RESETS! |. |> Filed upto 30th November following the F.Y. to which such invoice or debit ey note pertains or effective from ‘> Furnishing of therelevant annual return, Tite whichever is earlier @ ii.| fortheperiod D from the date of cancellation of registration or the effective date of cancellation of registration, as the case maybe, 2 till the date of order of revocation of cancellation of registration, where such return is filed within 30 days from the date of order of revocation of cancellation of registration, whichever is later of above (i) & (ii). [Note:- Norrefund shall be made of all the tax paid or ITC reversed, which would not have been |so paid, or not reversed, had sub-sec (5) & (6) been in force at all material times. Example:~ Can ABC Pvt. Ltd. claim ITC for a #1,00,000 invoice dated 20th July 2022, given that their GST registration was cancelled on Sth August 2022, revoked on Sth December 2023, and the return for the cancelled period was filed on 25th December 2023 with the annual return filed on Isth December 20237 Would your answer differ if, invoice dateis 20th July 2020? HINT: 1) Yes, ITC for the invoice dated 20th July 2022 can be claimed 25th December 23 as thisisthelater of:- a, 30th November 2023 i.e, the earlier of 30th November 2023 or ISth December 2023 or b. 25th December 2023 i.e. the date of filing return for the period from ISth August 2022 com, CAVishal Bhattad 609850850800(cancellation date) to Sth December 2023 (revoc: 2) Ifinvoice date is 20th July 2020 then last date of availing ITC is 30th Nov 2021 on that date registration was not cancelled. Hence, subsequent eligibility of TC is restricted u/s16(4). So, Provision of 6(6) is not applicable. Pemttnek eta ent tetris Ce) ABC Pvt. Ltd. is engaged in the supply of electronic goods. During the FY 2022-23, the company's GST re; n was cancelled on 1Sth August 2022. Subsequently, the cancellation was revoked on Sth February 2023 by an order from Appellate Authority. ABC Pvt. Ltd. filed return for the period for which registration stood cancelled on 25th February 2023. ABC Pvt. Ltd. has an invoice dated 20th July 2022 for goods supplied worth #1,00,000. Can ABC Pvt. Ltd. claim the ITC for the invoice dated 20th July 2022, Discuss with relevant provisions. Note: ABC Pvt. Ltd. has furnished annual return on 15th December 2023. Answer:~ Legal Provision: ‘> As per Sec 16(6) of CGST Act, if the registration of a registered person is cancelled u/s 29 and subsequently revoked u/s 30 or by an order from the Appellate Authority, Appellate Tribunal, or court, the registered person can claim ITC for the invoices or debit notes that were not restricted u/s 16(4) on the date of cancellation. Dts ITC can be claimed in the return filed tll the later of following dates: > Earlier of 30th Nov of following year or date of furnishing Annual return. > Return filed for period from the date of cancellation of registration or the effective date of cancellation of registration till the date of the order revoking the cancellation, if such return is filed within 30 days fromthe date of the revocation order. Discussion & Conclusion: 2 Inthe given case, ITC for the invoice dated 20th July 2022 will be claimed by the later of:- a) 30th November 2023 i.e. the earlier of 30th November 2023 or 1Sth December 2023 or b) 25th February 2023 i.e. the date of filing return for the period from 15th August 2022 (cancellation date) to Sth February 2023 (revocation order date). ‘2 Thus ABC Pvt. Ltd. must claim the ITC by 30th November 2023. Rule 36: Documentary requirements and conditions for claiming ITC (3)| No ITC of tax paid towards demands involving fraud [SPENT TET 24 Tax paid in pursuance of any order where any demand ‘as been confirmed on account of any fraud willful misstatement or suppression of facts u/s 74 cannot be availed as ITC. Sry (4)| Details of invoices/ debit notes uploaded by the supplier in his GSTR-1 , as amended in GSTR-IA if any, or using IFF & such details arecommunicated in Form GSTR-28 of RP availing ITC CAVishal Bhattad {09850850800 www.vsmartacademy.com V'Smart AcademyCBIC Clarifica ns Clarification on time limit for availing ITC u/s 16(4) for RCM supplies received from URPs & tax paid under RCM (Cir. No. 211/5/2024 ):- Clarification:~ 2 Registered recipient receiving supply from URP & also liable to pay tax under RCM has to issue invoice himself u/s 31(3)(f) & pays tax. > Based on such invoice, recipient becomes eligible to avail ITC. > Thus, the relevant F.Y. for calculation of time limit u/s 16(4) to avail ITC shall be the F.Y. in which invoice is issued by recipient u/s 31(3)(f), subject to payment of tax & other conditions of sec 16 £17. ‘> The F.Y. in which the supply was received is irrelevant here. 2 Ifrecipient issues invoice after its TOS & pays tax, he has to pay interest on such delayed payment of tax Gis also liableto penal action u/s 122. ‘Smart Academy www.vsmartacademy.com, CAVishal Bhattad {09850850800Availability of ITC in respect of Demo Vehicles purchase by dealer from manufacturer (Cir.no. 231/25/2024):- Authorised dealers purchase demo vehicles(seating capacity 13 or less) from Issue manufacturers against tax invoices are used for trial run & demonstrate its features to potential buyers & then sold at WOV by paying GST. Clarification | Demo vehicles are used for trial run & demonstrate its features to potential buyers. It’s used to promotes sale & thus, are used for making ‘further supply of such motor vehicles’. Thus, ITC for demo vehicles is not blocked u/s 17(5)(a) i.e ITC is available. If demo vehicle is used for other purposes like transportation of its employees/management etc. where, they are not used for making further supply of such motor vehicles’ & thus, ITC is blocked u/s 17(5)(a). Issue 2 If dealer merely acts as an agent/service provider to manufacturer for providing marketing service or test driveto potential customers on its behalf. Clarification | 2 Dealer doesn't buy & sell vehicles directly on its own account. ‘D Instead, manufacturer issues sale invoiceto customer. 2 Dealer may sell said demo vehicle to a customer after specified time or kilometres as per agreement with manufacturer on payment of GST. ‘> Such demo vehicles are not used for making further supply of it. Thus, its ITC would be blocked. Issue 3 ITC on demo vehicles if they are capitalized in books of account by authorized dealers Clarification | 2 If such vehicles are capitalized in books of dealer, it is considered as "capital goods”. 2 Availability of ITC on demo vehicles is not affected by its capitalization in dealer's books, they cannot claim ITC on that tax component. > If capitalized demo vehicle is subsequently sold by dealer, he shall have to pay tax as, persec18(6). CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart AcademyPtiattne hte tent tetris Krishna Motors is a car dealer selling cars of an international car company. It also provides maintenance and repair services of the cars sold by it as also of other cars. It seeks your advice on availability of input tax credit in respect of the following expenses incurred by it during the course of its business operation: 1) Cars purchased from the manufacturer for making further supply of such cars. Two of such cars are destroyed in accidents while being used for test drive by potential customers. What would be your answer if Krishna Motors purchases a demo vehicle for demonstration purposes. 2) Works contract services availed for constructing a car parking shed in its premises [Study Mat] Answer: 1. [Legal Provision: DAs per section 17(5)(a) of CGST Act, ITC is not available on Motor vehicle for transportation of | persons having approved seating capacity of not more than 13 persons (including driver), except when they are used for making taxable supplies for further supply of such motor vehicles. Discussion f conclusion: > Thus, ITC on cars purchased from the manufacturer for making further supply of such cars will be allowed. > However, ITC on the cars fully destroyed in accident will not be allowed as the ITC on goods destroyed for whichever reason is specifically blocked u/s 17(5)(h). In second case, CBIC clarified that ifthe vehicle s solely used for demonstration purposes and not for passenger transport or training, then ITC is not blocked u/s 17(5)(a). Legal Provision: 2 As per section 17(5)(c) of CGST Act, ITC is blocked on works contract services supplied for construction of an immovable property (other than Plant & Machinery) except where it is an input Service for further supply of works contract service. Discussion & conclusion: 2 Inthe given case, the car parking shed is not a plant and machinery, and the works contract service is not used for further supply of works contract service. > Thus, ITC thereon will not be allowed. Clarification on entitlement of ITC by insurance co. on expenses incurred forrepair of motor vehicles in case of reimbursement mode of insurance claim settlement (Cir. No. 217/11/2024):~ Facts: D Insurance co. provide general insurance for motor vehicles & handle repair/damages costs through either Cashless ot Reimbursement modes. ‘> Under both modes, repair invoices are issued by garages to insurance co. > For Cashless mode, insurers directly pay network garages for approved repairs, while for Reimbursement mode, policyholders (insured) pay non-network garages (with whom there is no routine business relationship of insurance co.) & are later reimbursed by insurers for approved repair/claim cost (accounted repairs liability). 2 Insurance co. avail ITC of tax paid for such repair services based on invoices issued by garages in both modes of settlement. V'Smart Academy www.vsmartacademy.com, CAVishal Bhattad (09850850800Clarification: Availability of ITC to insurance co. for repair expenses reimbursed by it in case of reimbursement mode of claim settlement:- 2 Sec 17(5) provides that ITC for repair service of motor vehicles shall be available where received by a taxable person engaged in supply of general insurance services in respect of motor vehicles insured by him. D In reimbursement mode, the liability to pay for repair service for approved claim cost lies with insurance co., irrespective of fact that expense is first paid by insured to garage & then reimbursed to insured for approved claim cost. > ITC is available to insurance co. (as a recipient) for such repair expenses incurred in reimbursement mode, since such service is used for outward supply of insurance services for such motor vehicles & itis not barred u/s 17(5). Repairs invoices Not in Insurer's Name: Sec 16(2)(a) & (aa) not satisfied & thus, ITC is not available to insurance co. Clarification on availability of ITC on ducts & manholes used in the network of optical fiber cables (oF Cs) u/s 17(5) (Cir. No. 219/13/2024) The Cellular Operators Association of India (COAI) reported that some tax authorities were denying ITC on ducts and manholes used in OFC networks for telecommunication services, considering them immovable property (other than plant & machinery). Whether such ITC is barred u/s 17(5)(c) & () read with explanation to secl7? Issue Clarification | > Sec 17(5)(c) & (a) restricts ITC on certain items related to immovable property, excluding plant & machinery. 2 Duets & manholes are integral to OFC network for providing telecommunication services (signals from one point to another, etc.) & maintenance. 2 They are not classified as land, buildings, civil structures, telecommunication towers, or pipelines outside the factory premises. 2 Therefore, ducts & manholes fall under "plant & machinery” & are eligible for ITC & not blocked u/s17(5)(c) & (a). CAVishal Bhattad 09850850800 www.vsmartacademy.com it Academy.PLACE OF SUPPLY (IGST Act) CBIC Clarifications Clarification on sec 10(1)(ca) of IGST Act on POS of goods to URPs (Cir. No. 209/3/2024 Issue POS u/s 10(1)(ca) of IGST Act, if SOG is made to URP where billing address is different from address of delivery of goods, especially in supply through e-commerce platforms? Case Mr. A (URP) located in X State places an order on an e-commerce platform for mobile phone. He provides billing address located in X state but mobile is to be delivered at an address located in Y State. What shall bethe POS? ‘> For goods supplied through e-commerce platforms to URP, if billing address differs from Clarification| the delivery address in invoice, POS shall be the address of delivery of goods recorded oninvoicei.e, State Y. > Supplier may record the delivery address as address of recipient on invoice to determine POS in this case. Petittnek tent etnies CORTE A XYZ Pvt. Ltd., a furniture manufacturer based in Rajasthan, receives an order from Mr. Sharma, an individual (unregistered person) residing in Delhi. Mr. Sharma purchases a g table and requests delivery to his residence in Delhi. XYZ Pvt. Ltd. issues an invoice with Mr. Sharma's Delhi address and arranges for the delivery of the dining table through a third-party logistics provider. Determine Place of Supply and GST implications. Will the place of supply still be same, if Mr. Sharma instructs XYZ Pvt. Ltd. to deliver the dining table to another address located in Punjab which is recorded in invoice as address of delivery whereas the billing is done at Delhi's address? Answer :-Legal Provision :~ 2 As per section 10(1)(ca) of |GST Act, if the supply of goods is made to unregistered person, the place of. supply shall bethe location as per the address of the said person recorded inthe invoice. > However, If the address of the unregistered person is not recorded in the invoice, the place of supply shall bethe location of the supplier. 2 As per CBIC clarification, ifbilling address differs from delivery address in invoice in case of supply of goods to unregistered person, POS shall be address of delivery of goods recorded on invoice. Discussion & Conclusion: > Inthe given case, the invoice issued by XYZ Pvt. Ltd. records Mr. Sharma's address in Delhi. Therefore, the place of supply forthis transaction will be Delhi. © Since the place of supply (Delhi) is different from the location of the supplier (Rajasthan), this transaction constitutes an interstate supply. Thus, liable to |GST. > Insecond case, ifbilling address differs from the delivery address in invoice, POS shall be the address of delivery of dining table recorded on invoicei.e. Punjab. V’Smart Academy www.vsmartacademy.com, CAVishal Bhattad 09850850800Clarification on POS applicable for custodial services provided by banks to Foreign Portfolio Investors (FPIs) (Cir. No.220/14/2024):- issue ‘Whether the custodial services provided by banks to FP!s will be treated as services provided to ‘account holder’ & POS shall be based on location of service provider (banks or Fl) as per Sec 13(8)(a) of IGST Act? Custodial |5 Custodial services involve safekeeping securities, managing accounts, collecting Services benefits, informing clients of actions, and reconciling records. Definition | 5 Banks mainly manage securities accounts for FPls through custodial agreements. Clarification | > Custodial services by banks/Fls to FPls are not treated as services provided to an “account holder." > These services are not covered u/s 13(8)(a) of the IGST Act, and POS should be determined under the default provisions of Sec 13(2). Clarification for advertising services provided by Indian advertising companies/ agencies to foreign clients (Cir.No. 230/24/2024) Case DA foreign company hires an Indian advertising agency to manage all aspects of its advertising, such as media planning, content creation, and campaign monitoring. 2 The agency then works with media owners in India to buy media space for the ads and track the campaign's progress. ‘> The media owners raise invoice to agency for the media costs, which the agency pays. Then, the agency raises invoices to the foreign client for its advertising services and receives payment in foreign currency. Legal 'D Refer sec 2(13) of GST Act read with Circular no. 159/15/2021 for definition provision of intermediary, sec 2(93)(a) of CGST Act for definition of recipient. > Refer Sec 2(6), 13(2) & 13(3) of IGST Act. Is an advertising co. | 5 The advertising agency has two separate agreements: one with the foreign isan "intermediary" | clientand another with the media company. Invoices are issued based on these u/s 2(13) of the GST| agreements. Act, making POS u/s | This setup means the advertising agency & the media company are making 13(8)(b)? independent transactions with each other, and there is no direct agreement between the media company and the foreign client. ‘> The advertising agency is not acting as an agent & provides services to foreign client on its own account. Clarification: > The advertising agency is providing the main advertising services, including buying media space, to the foreign client on a principal-to-principal basis. > The agency is not considered an "intermediary" under the IGST Act. > POS cannot be linked with LOS of services as per sec 13(8)(b) of said Act. CAVishal Bhattad (09850850800 www.vsmartacademy.com ‘Smart Academy[Can a foreign client's lor the target audience Ibe considered the lrecipient of ladvertising services ju/s 2(93) of the |CGST Act? The foreign client is responsible for paying the advertising agency for the [representative in Indiq advertising services, not the consumers or target audience who see the ads. 2 Even if there is a representative or target audience in India, they are not considered the recipient ofthe services. > The advertising agency issues the invoice to the foreign client and receives payment directly from them. Clarification: The recipient of the advertising services is the foreign client, not their Indian representative or the target audience in India, according to sec 2(93) of CGST Act. can advertising services to foreign clients be considered performance-based u/s 13(3) of the IGST Act? ‘> Section 13(3)(a) of the |GST Act doesn't apply here, as the advertising service doesn't involve goods that need to be physically available with the supplier. > Similarly, Section 13(3)(b) doesn't apply because the foreign client or their representative doesn't need to be physically present to avail of the advertising service. ‘> Therefore, the POS for advertising services is not determined by Section 13(3). Instead, it is determined u/s13(2) of IGST Act. Since the recipient is the foreign client located outside India, the POS is the location of the foreign client (outside India) u/s 13(2), making this an export of services, provided all export conditions are met. Wf an advertising co. in India acts as an agent for a foreign client in securing media space, what is the POS? ‘> The agreement for media space and ad broadcast is directly between the media owner and the foreign client, with the media owner directly invoices and receiving payment from the foreign client. ‘> The advertising company only helps facilitate this process and does not provide the serviceitself. > The advertising company invoices the foreign client for its facilitation services. ‘> Thus, advertising co. is an "intermediary" for facilitating this service fits POS shall be location of supplier (advertising co.) as per sec 13(8)(b). Clarification on POS of data hosting services provided by service providers located in India to cloud computing service providers located outside India (Cir. No. 232/26/2024):- Legal provision > Refer sec 2(13) of IGST Act read with Circular no. 159/15/2021 for definition ofintermediary. > Refer sec 2(6), 13(3)(a), 13(8) &13(4) of IGST Act. ls a data hosting service provider an “intermediary” u/s 2(13) of IGST Act betw’ cloud providers and end users? Are their services being intermediary services with POS u/s 13(8)(b)? > The data hosting service provider either owns or leases a data centre, where they ‘manage infrastructure and operations to offer data hosting services. > End users/customers/subscribers access cloud services provided by the cloud computing provider over the internet, without the data hosting provider interacting with them. 2 Thus, the data hosting provider offers services directly to the cloud computing provider, not acting asa broker or agent. Clarification: This service is not considered intermediary services, so its place of supply cannot be determined u/s 13(8)(b). ‘Smart Acai www.vsmartacademy.com, CAVishal Bhattad (09850850800Ave data hosting services provided in relation to goods “made available” by the recipient, with POS determined u/s| 13(3)(a) of GST Act? 3. The data hosting service provider is an independent entity offering data hosting services to overseas cloud providers. 2 The hosting provider owns and manages all necessary infrastructure (hardware, power, security, ete.) and maintains it independently. 2 The cloud providers do not own or provide this infrastructure. Instead, the hosting service provider charges fees for its services as per specific agreements, operating as a separate entity. Clarification: > Data hosting services are not related to goods "made available” by the recipient (cloud provider) to the supplier (hosting provider), so the POS cannot be determined u/s13(3)(a). > Even if the cloud computing service provider provides hardware, the data hosting services are not considered to be provided in relation to the goods made available by the cloud provider. > Therefore, the POS cannot be determined u/s 13(3)(a). Are data hosting services provided in relation to "immovable property” Jwith POS determined u/s 13(4) of 1GsT| Act? > Data hosting services are not passive services related to immovable property. Instead, they involve providing essential services for cloud computing to end users/customers/subscribers. Clarification: Data hosting services are not directly linked to immovable property or physical premises, so the POS cannot be determined u/s 13(4). What is the POS for data hosting services provided by an Indian provider to overseas cloud computing, service providers? ‘> The POSis not covered u/s13(3) to13(13).. > Therefore, POS will be determined u/s 13(2), which is the location of the service recipienti.e outside India. 2 This canbe treated as an export of services ifall export conditions are met. CAVishal Bhattad (09850850800 www.vsmartacademy.com V'Smart AcademyREGISTRATION [Moe oe ibis ori (4a) Aadhaar [Choosing —_| fapplicantis not exempt under section 25(6D) and want to use his Authentication |aadhaar ‘Aadhaar for authentication: AA) lAuthentication| 2 applicant will need to do this as part of his application process. biometric authentication) [Application | The date of submission of the application in such cases shall be the Submission | EARLIER of:- Date ‘> The date you complete Aadhaar authentication, or ‘215 days after applicant have submitted Part B of his GST REG-01 form, whichever comes first. [Additional | |f applicant have opted for Aadhaar authentication and are flagged Verification by the system based on data analysis and risk parameters, Steps if > Hewill go through biometric authentication, JAAis opted & | > His photograph willbetaken. ‘> This applies to both individuals and relevant representatives if the applicantis not an individual. > He must also have his documents verified at a Facilitation Centre. ‘2 His application is only considered complete after all these steps aredone. its completion Additional > If a person [other than a person notified u/s 25(6D)] has not |Verification opted for authentication of Aadhaar number, every application Steps if made under sub-rule (4)(validation of part -B of REG-0l) by AAs mot him shall be followed by taking photograph. opted & its : eee . > of the applicant where the applicant is an individual or completion > of such individuals in relation to the applicant as notified u/s Dea] Ryan eren 25(6C) where the applicantis not an individual, along with the verification of original copy of documents uploaded with the application in FORM GST REG-01 at one of the Facilitation Centers notified by Commissioner for this. ‘> The application shall be deemed to be complete only after successful verification of this process. ‘V’Smart Academy ‘wwwsmartacademy.com CA Vishal Bhattad (9 09850850800Peet ror L eee CaS ratio ke tert [Rute 21 :~ Following are the circumstances where the PO may cancel the registration of a ICancellation of | person from such date, including any retrospective date, as he may deem fit:- registration by |2)]A RP has contravened following provisions (Rule 21): Po on his own b)| Dummy POB] 5 He does not conduct any business from the declared place of business or motion only: | & Jor invoice | 5 He issues invoice/bill without supply of goods &/or services in °) violation of provisions of GST Act or rules made thereunder. Violation of | 5 He violates the provisions of sec 171 (i.e. Anti-Profeetering measure) Specified ‘> He violates the provision of Rule 10A (i.e. furnishing of bank account provision details) > He avails ITC in violation of sec 16 of CGST Act or rules made thereunder or ‘> He violates the provision of rule 868 [restriction of 99%ITC] [Mismatch of | > He furnishes the details of outward supplies in FORM GSTR 1, as |GSTR - lor amended in FORM GSTR-1A if any, u/s 37 for one or more tax |GSTR 1A & 38) A periods which is in excess of outward supplies declared by him in / his valid return u/s 39 (GSTR-3B) forthe said tax periods or Non-filing [Normal [RP has not furnished returns u/s 39(1) for a ofreturn |scheme —_|continuous period of 6 months QRmP RP has not furnished returns under QRMP (proviso to scheme —|u/s39(1)) foracontinuous period of 2 tax periods. |Composition|A person paying tax under Composition Scheme (Sec lLevy. 10) has not furnished return for a F.Y. beyond 3 months from the due date of furnishing the said return fails to file|> failed to file returns due between the order off return after| cancellation and revocation of registration within 30} revocation| daysoftherevocation order. order > If the cancellation was retrospective, failed to file all returns from the date of order of cancellation date to| the revocation order within 30 days. Rule 21A(2A):- Suspension of Registration NTT ‘> The PO compares the person's GST returns with GSTR-I, as amended in FORM GSTR-1A if any, or the inward supplies derived from the suppliers’ GSTR-1 or in FORM GSTR-IA of the previous tax period, ifany. EET 2 Significant differences or anomalies that suggest a violation of the GST Act or rules may lead to suspension and potential cancellation of registration.Pee Ce mer aoe CL) (2) Notified person | Overriding sec 22(1)/24, the Government may, on the recommendations of by Govt {the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted Proviso (Inserted by | |s-om obtaining registration under this Act. 24/2024):- Nothing contained in this notification shall apply to any person engaged in the supply of metal Persons making only reverse charge supplies (N/N 5/2017) Persons engaged only in making supplies of taxable goods &/or services, total tax on whi ble to be paid on reverse charge basis by recipient] u/s 9(3) are exempted from obtaining registration Example: Ganga Transporters, a Goods Transport Agency (GTA), is engaged in| scrap, falling under | | providing GTA services taxed under reverse charge at 5%. They provide services to Chapters 72 to 81 in the | | sharma Industries Pvt. Ltd.,a company with an agg.T/o belowthethreshold limit. first schedule to the||” Entity | service type| Age. 1/0 |@STReg- | Reason Customs Tariff Act, Requirement | ——_ 5 ervices under 1975. Ganga Grit Services Not Exempt —_| reverse charge; |Transporters svely | Applicable | Sec 23(2) |no self-@ST supplied payment [Sharma Recipient of Below ‘Mandatory Liable for reverse Industries Pvt.| GTA Service Threshold Sec 24 charge tax on Ltd. Limit |GTA services VG Cle a Tae ee SS Manner of issuing the invoice [Rule 48] [(3)/Serial number] The serial number of invoices issued during a tax period shall be furnished [to be furnished] electronically through the common portal in FORM GSTR-I or in FORM GSTR-IA, if any. aProcessto | 5 The above URP or an URP opting to generate e-way bill shall submit details generate electronically on common portal in prescribed form (Form GST ENR- 03) e-way bill directly/through a notified Facilitation Centre. byan URP | 5 Upon validation of furnished details, a unique enrolment number shall be generated & (Proviso 4) | communicated. Dee arenes) PAYMENT OF TAX Che een Punta ern an re Cn Cues aes The interest in cases where the tax return has been furnished after the due date (but furnished before commencement of proceedings under Sec 73 or Sec 74 ) shall be levied on that portion which is paid by debiting the electronic cash ledger Note: Debit to e-cash ledger includes Net output liability (output tax ~ ITC) & RCM payment Comment :~ Ifreturnis filed within due date but taxis short paid, then proviso shall not apply and interest is payable on gross tax liability. Proviso to Rule | Where any amount has been credited in Electronic Cash Ledger as per sec 49(1) onor 888 (1) before the due date of filing the said return, but is debited from the said ledger for payment of tax while filing the said return after the due date, the said amount shall not be taken into consideration while calculating such interest if the said amount is lying in the said ledger from the due date till the date of its debit at the time of filing return. Electronic Credit Ledger: Rule 86(48)(b)| Where a registered person deposits the amount of erroneous refund sanctioned to (words him, - omitted) (a) u/s54(3) of the Act, or under rule 96(3), #reentravention-ef sub—rute10) of rute-96, along with interest and penalty, wherever applicable, through FORM GST DRC-03, by debiting the electronic cash ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re- credited to the electronic credit ledger by the proper officer by an order made in FORM GSTPMT-03A.