Circular, 2024

Text

Reproduced from the document India Code holds for this instrument. The Gazette prints Hindi and English side by side and this is the English; the Department's own PDF remains the authority.

To, Office of the Commissioner, State Tax, Uttar Pradesh (GST Section) Letter No. GST/2024-25/ q L{ /State Tax Lucknow: Dated: Q:h September, 2024 All Zonal Additional Commissioner Grade -1, Additional Commissioner Grade -2 (S.I.B.) State Tax, Uttar Pradesh.

Subje: Clarifications regardin licability of GST on certain services — reg. In exercise of the powers conferred under section 168 of the Uttar Pradesh Goods and Services Tax Act, 2017 and on the recommendations of the 53" GST Council in its meeting held on 22™ June, 2024, at New Delhi, clarifications, related to the following issues are being issued through ii.

vii.

viti.

ais circular:

GST exemption on the outward supplies made by the Ministry of Railways (Indian Railways).

GST exemption on the transactions between Special Purpose Vehicles (SPVs) and Ministry of Railways (Indian Railways).

Applicability of GST on the statutory collections made by the Real Estate Regulatory Authority (RERA) in accordance with the Real Estate (Regulation and Development) Act, 2016.

Applicability of GST on the incentive amount shared by acquiring bank with other stakeholders in the digital payment ecosystem under the notified Incentive Scheme for promotion of RuPay Debit Cards and low value BHIM-UP1 transactions. GST liability on the reinsurance of specified general and life insurance schemes. GST liability on the reinsurance of insurance schemes for which total premium is paid by the Government.

Applicability of GST on retrocession services.

GST liability on certain accommodation services.

2 GST excmption on the outward supplics made by Ministry of Railways (Indian Railways).

2.1 Based on the request of Ministry of Railways (Indian Railways) and rccomnvcmluliun\ of the 52nd GST Council meeting held on 07.10.2023, all supplies of goods and services made by Ministry of Railways (Indian Railways) were brought under Forward Charge Mechanism and consequently exemptions that were available to Ministry of Railways (Indian Railwwys) were withdrawn vide notification No.1468 dated 17.11.2023.

2.2 However, Ministry of Railways had brought out certain difficulties in implementation of the abovesaid notification and matter was examined by the 53rd GST Council in its mecting held on 22nd June, 2024.

23 GST Council has recommended to exempt the services provided by Ministry of Railways (Indian Railways) to general public viz., sale of platform tickets, facility of retiring rooms/waiting rooms, cloak room: services and battery-operated car services. GST council has aiso recommended to exempt the supply of services made between various zones/ divisions under Ministry of Railways (Indian Railways). Notification No. 719 dated 03.09.2024 has been issued in this regard and effcctive date of implementation of the said notification is 15.07.2024. 2.4 The GST Council in its 53" meeting has also recommended to regularize GST liability for the intervening period i.e. from 20.10.2023 to 14.07.2024 on ‘as is where is’ basis. 2.5 Therefore, as recommended by the 53rd GST Council, the GST on the services provided by Ministry of Railways (Indian Railways) to general public viz., sale of platform tickets, facility of retiring rooms, cloak room services and battery-operated car services and supply of services made between various zones/ divisions under Ministry of Railways (Indian Railways) is hereby regularized on ‘as is where is’ basis from 20.10.2023 to 14.07.2024. 3.GST exemption on the transactions between Special Purpose Vehicles (SPVs) and Ministry of Railways (Indian Railways).

3.1 Based on the recommendations of the 48" GST Council meeting held on 17.12.2022, it was clarified to Ministry of Railways (Indian Railways) that supply of services by SPVs to Ministry of Railways (Indian Railways) by way of allowing Indian Railways to use infrastructure built and owned by them during the concession period against consideration and maintenance services supplied by Ministry of Railways (Indian Railways) to SPVs are taxable. 32 However, Ministry of Railways had brought out certain difficulties faced in implementation of the said recommendations of the 48" GST Council and matter was examined by the 53 GST Council in its meeting held on 22nd June, 2024, 33 GST Council has Railways ([m({i::“[:‘,lli::;b wCEmmcndcz% to cx?mpt the supply of service by SPVs to Ministry of 6l Endt) by sp‘vq | ) y way of n[loAng In'dian Railways to use the infrastructure built cervices supp['icd h,‘M(- u}l‘mg lh‘c gonccsswn ?cnod against consideration and maintenance ) y Ministry of Railways (Indian Railways) to SPVs from GST. Notification No. 719 dated 03.09.2024 has been issued in this regard.

t».vl» The QST Council in its 53" meeting has also recommended to regularize the past period 1;\ 1Fs;)ccl of such transactions for the period from 01.07.2017 to 14.07.2024 on ‘as is where is’ asis.

35 ) Thus, as reccommended by the 53rd GST Council, GST on the supply of services by SPVs to Ministry of Railways (Indian Railways) by way of allowing it to use infrastructure built and owned bv them during the concession period against consideration and maintenance services supplied by Ministry of Railways (Indian Railways) to SPVs in relation to such use of infrastructure built and owned by SPVs during the concession period against consideration is hereby regularized for the period from 01.07.2017 to 14.07.2024 on ‘as is where is’ basis.

4. Applicability of GST on the statutory collections made by the Real Estate Regulatory Authority (RERA) in accordance with the Real Estate (Regulation and Development) Act, 2016.

4.1 Representation has been received requesting for clarification on whether GST is applicable on the statutory collections made by the Real Estate Regulatory Authority (RERA). 4.2 RERA is constituted under the Real Estate (Regulation and Development) Act, 2016. RERA performs function of regulating the real estate development and construction of the building entrusted to them which fall under Entry No.1 and 2 of the Twelfth Schedule of the Indian Constitution.

4.3 RERA is a ‘governmental authority’ as per the definition in the exemption notification

No.843 dated 30.06.2017 and is covered under the scope of entry at S1. No. 4 of notification No 843 dated 30.06.2017.

mmended to clarify that statutory collections 43 GST Council in its 53" meeting has reco! otification No. 843 dated 30.06.2017.

made by RERA are covered under the SI. No. 4 of n 531 GST Council, it is hereby clarified that statutory 4.4 Thus, as recommended by the collections made by RERA are covered under the SI. No. 4 of notification No. 843 dated

3. Applicability of GST on the incentive amount shared by acquiring banks with other pp ) stakeholders in the digital payment ccosystem under the notified Incentive Scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions. 5.1 Representation has been received requesting for clarification on whether GST s applicable on the incentive amount shared by acquiring banks with other stakeholders in the digital payment ccosystem under the notified Incentive Scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions.

5.2 Under the notified Incentive Scheme for promotion of RuPay Debit Cards and low valuc BHIM-UPI transactions, the Ministry of Electronics and Information Technology (MeitY) pays the acquiring banks an incentive as a percentage of the value of the transactions up to two thousand rupees. Applicability of GST on the incentive paid by the MeitY to acquiring banks under the notified Incentive Scheme for promotion of RuPay Debit Cards and low valu: BIIIVI- UPI transactions was examined in the 48th GST Council meeting held on 17th December, 2022 and based on the recommendations of the GST Council meeting, it was clarified by Cir No 190/02/2023- GST dated 13" January, 2023, that incentives paid by MeitY to acquiring banks under the said scheme are in the nature of subsidy and thus, not taxable. 5.3 The Gazette Notifications dated 17th December, 2021 and 14th January, 2023 issucd by MeitY state that the incentives will be shared by the acquiring banks with other payment system participants and the payment system operator, in the proportion and manner decided by the National Payments Corporation of India (NPCI) in consultation with the participating banks MeitY pays the incentive to the acquiring bank and it is further shared by the acqui-ing bank with the issuer bank. Issuer bank further shares the incentive with the Payer Payment Service Provider (PSP), which are typically banks, and the UPI app.

54 The share of incentive paid by the acquiring bank to the issuer bank and further shared by the issuer bank to the Payer PSPs and the UPI app are decided by the NPCI in consultation with participating banks. Payer PSPs may choose to further share this incentive with Third Party \pp Providers (TPAP). However, the proportion of the incentive shared by Payer PSPs with TPAPs 18 not being decided by NPCI in consultation with the participating banks for Financial Years 2021- 22 and 2022-23 and was determined by the business agreement between the Payer PSPs and

TPAP.

54 GST Council in its 53rd mecting held on 22nd June, 2024 has recommended to clarify that further sharing of the incentive amount by the acquiring bank with other stakeholders. up to the point where the incentive is distributed in the proportion and manner as decided by NPCI in consultation with the participating banks under the notified Incentive Scheme, is in the nature of a subsidy and thus, not taxable.

5.5 Thus, as recommended by the 53" GST Council, it is hereby clarified that further sharing of the in~entive amount by the acquiring bank with other stakeholders, up to the point where the incentive is distributed in the proportion and manner as decided by NPCI in consultation with the participating banks under the notified Incentive Scheme for promotion of RuPay Debit Cards and low value BHIM-UP! transactions, is in the nature of a subsidy and is thus, not taxable.

6. GST liability on the reinsurance of specified general and life insurance schemes. 6.1 Representations have been received to cither exempt or regularize the GST liability, for the period from 01.07.2017 to 24.01.2018, on reinsurance of specified general insurance and life insurance schemes, which are exempt from GST.

6.2 Cortain specified general insurance and life insurance schemes are exempt from GST under SI. Nos. 35 and 36 of notification No. 843 dated 30.06.2017. Vide entry at SL. No. 36A of the said notification, reinsurance of the aforesaid exempted insurance schemes has also been cexempted w.e.f. 25.01.2018.

6.3 GST Council in its 53rd meeting held on 22nd June, 2024 has recommended to regularize the GST liability on such reinsurance of exempt general insurance and life insurance schemes for the past period, i.e. from 01.07.2017 to 24.01.2018, on ‘as is where is” basis. 6.4 Thus, as recommended by the GST Council, GST liability on the services by way of reinsurance of the insurance schemes specified in Sl. Nos. 35 and 36 of notification No. 843 dated 30.06.2017 is regularized for the period from 01.07.2017 to 24.01.2018 on “as is where is’ basis.

7. GST liability on the reinsurance of insurance schemes for which total premium is paid by the Government.

7.1 Representations have been received to exempt GST, for the period from 01.07.2017 to 26.07.2018, on reinsurance of those insurance schemes for which total premium is paid by the Government.

7.2 Services provided to the Central Government, State Government, or Union Territory under anv insurance scheme for which total premium is paid by the Central Government, State Government, or Union Territory are exempt from GST under Sl. No. 40 of notification No. 843 dated 30.06.2017. Vide entry at SI. No. 36A of the said notification, re-insurance of the aforesaid insurance schemes has been prospectively exempted w.e.f. 27.07.2018. 7.4 GST Council in its 53rd meeting held on 22nd June, 2024 has recommended to regularize the GST liability on such reinsurance of Government sponsored insurance schemes for the past period, i.e. from 01.07.2017 10 26.07.2018, on “as is where is’ basis. 7.5 Thus, as recommended by the GST Council, GST liability on the services by way of reinsurance of insurance services covered under Sl No. 40 of notification No. 843 30.06.2017 is regularized for the period from 01.07.2017 to 26.07.2018 on ‘as is where is” b .l asis.

8. Applicability of GST on retrocession services.

8.1 Representations have been received to clarify whether the term ‘reinsurance’ as mentioned in SI. No. 36A of notification No. 843 dated 30.06.2017 includes ‘retrocession’. 8.2 The matter was placed before the GST Council in its 53" mecting held on 22" Junc. 2024. As per the IRDAI (Re-insurance) Regulations, 2018, 'Retrocession’ means a re-jnsurance transaction whereby a part of assumed reinsured risk is further ceded to another Indian Insurer or a CBR (Cross Border Re-insurer). Accordingly, the GST Council has recommended to clarify that reinsurance includes retrocession services.

8.3 Thus, as recommended by the GST Council, it is hereby clarified that the term ‘reinsurance’ as mentioned in SI. No. 36A of notification No. 843 dated 30.06.2017 includes ‘retrocession” services.

9. GST liability on certain accommodation services.

9.1 Representations have been received requesting to clarify whether service bv way of hostel accommodation, service apartments/hotels booked for longer period is a service of renting of residential dwelling for use as residence and exempted under entry at SI. No. 12 of notification

No. 843 dated 30.06.2017. Requests have also been received for GST exemption on hostels for poor and middle-class students run by charitable trusts.

9.2 The matter was placed before the GST Council in its 53" meeting held on 22" June, 2024 and the GST Council recommended to exempt the supply of accommodation services having valuc of supply less than or equal to twenty thousand rupees per person pur(mnmh provided that the accommodation service is supplied for a minimum continuous period of nmul,\. days. The samc has been exempted w.e.f. 15.07.2024 vide notification No. 719 dated 9.3 In its 53" meeting, the GST Council further reccommended extending the benefit for past cases provided that value of supply of accommodation services supplied was Ic twenty thousand rupees per person per month and that the accommodation s for a minimum continuous period of ninety days.

than or equal to ce was supplied S, as recommended by the GST Council, GST liability on the supply of accommodation Sf}:‘”““ s regulariscdon ‘as is where is' basis for the period from 01.07.2017 to 14.07.2024 where value of supply of the accommodation service is less than or equal to twenty thousand rupees pel S . . . e - p f.s per person per month and the said accommodation service was supplied for a minimum continuous period of ninety days.

10. Difficulties, if any, in the implementation of this circular may be brought to the notice of the Undersigned.

By Order, /\”'L/ 74l Commissioner, State Tax, U.P.

Copy To:

1. Joint Commissioner (I.T.), State Tax HQ, Lucknow for uploading the Circular on the Departmental Website.

State Tax HQ, Lucknow.

Provisions this circular answers to

Read out of the instrument itself: an enabling provision is one it says it was made under, which is the power it rests on. The rest it names without resting on.

Other instruments under the same Act

All of the The Uttar Pradesh Goods and Services Tax Act, 2017