TaxTMI 
TaxTMI 
Clarifications regarding applicability of GST on certain services
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....d seeking clarification on the applicability of GST on penal charges being levied by the Regulated Entities (RES) in view of RBI instructions dated 18.08.2023 directing such Regulated Entities (RES) to levy penal charges in place of penal interest. 2.2 Regulated Entities (RES) such as banks and non-banking financial companies (NBFCs) have been instructed, vide RBI instructions dated 18.08.2023, to discontinue the use of penal interest for non-compliance with loan terms. As per the instructions, instead of penal interest, RES are to levy penal charges for non-compliance with loan terms. The intent of levying penal charges is essentially to inculcate a sense of credit discipline. These instructions are effective from 01.01.2024, and do not apply to credit cards, external commercial borrowings, trade credits and structured obligations which are covered under product specific directions. 2.3 It is being viewed by certain field formations that penal charges so levied are in the nature of payment/consideration for tolerating an act or situation. Similar issues were examined in Circular No. GST-11/2022 dated 10.08.2022, wherein it has already been clarified that certain ....
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....mption entry, the term 'acquiring bank' has been explained as under: "acquiring bank" means any banking company, financial institution including non-banking financial company or any other person, who makes the payment to any person who accepts such card" 3.4 Clause 8 of the RBI's Guidelines on Regulation of Payment Aggregators and Payment Gateways dated 17.03.2020, pertaining to 'Settlement and Escrow Account Management' makes it clear that the PAS receive payments from customers in an escrow account, and are obligated to do the final settlement with the merchant within time periods specified by RBI. Therefore, the RBI regulated PAS, involved in the settlement process of making payments to the merchant are covered by the second part of the definition of acquiring bank, i.e. "any other person, who makes the payment to any person who accepts such card' and hence, fall within the definition of acquiring bank, for the purpose of the exemption under Sl. No. 34 of notification No. 12/2017- No. FD 48 CSL 2017 dated 29.06.2017, as they make the payment to the merchants who accept credit cards, debit cards, charge cards or other payment card s....
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....ovided by Government Entities or research associations, universities, colleges or other institutions, notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961, against consideration in the form of grants. 4.3 Accordingly, for the past period, the Council, in its 55th meeting, has recommended to regularize payment of GST on the supply of research and development services by Government Entities against grants received from the Government Entities for the period 01.07.2017 to 09.10.2024 on 'as is where is ' basis. 4.4 Thus, as recommended by the 55th GST Council, the payment of GST on the supply of research and development services by Government Entities against grants received from the Government Entities is regularized for the period 01.07.2017 to 09.10.2024, on 'as is where is ' basis. 5. Regularizing payment of GST on skilling services provided by Training Partners approved by the National Skill Development Corporation. 5.1 On the recommendations of the 54th meeting of the GST Council held in New Delhi on 09.09.2024, the entry at Sl. No. 69 of the Notification No. 12/2017 No. FD 48 CS....
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....nance, furniture maintenance and horticulture, from facility management agency, for the upkeep of their office. MCD has sought clarification as to whether such services received by them are exempt from GST in terms of Sr. No.3A of the notification No. 12/2017-CTR dated 28.06.2017. 6.3 The said entry at Sr. No. 3A of notification No. 12/2017-CTR dated 28.06.2017 provides exemption to composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply provided to the Government or local authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of The Constitution of India or in relation to any function entrusted to a Municipality under Article 243 W of The Constitution of India 6.4 However, in the instant case, MCD is receiving the services of facility management such as housekeeping, civil maintenance, furniture maintenance and horticulture agency for the upkeep of their office. These services are not supplied in relation to performing any functions entrusted to a Municipality under Article 243 W of The Constitution of India. Such services....
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.... No. 13/2017 No. FD 48 CSL 2017 dated 29.06.2017 thereby prescribing payment of GST on reverse charge basis on renting of immovable property other than residential dwelling (commercial property) by unregistered person to registered person. 8.3 Various representations from different sectors were received requesting to bring the service of renting of commercial property by unregistered person to registered person-under Forward Charge basis. 8.4 55 th GST Council in its meeting held on 21.12.2024 recommended that taxpayers registered under composition levy may be excluded from the entry at Sr. No. 5AB of the notification No. 13/2017 No. FD 48 CSL 2017 dated 29.06.2017. The same has been notified vide notification No. 07/2025 No. FD 02 CSL 2025 dated 17.01.2025. The Council further recommended that payment of GST on reverse charge basis on renting of immovable property other than residential dwelling (commercial property) by unregistered person to a registered person for taxpayers registered under composition levy may be regularized on 'as is where is' basis for the intervening period (i.e., date of effect of notification No.09/2024 No. FD 02 CSL 2024 dated 16....