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Exemption in relation to services provided by government Entry 4, 5 & 6 - GST Ready Reckoner - GSTExtract Exemption in relation to services provided by government Exemption entry 4 Services by Central Government, State Government, Union Territory, Local authority or Governmental authority by way of any activity in relation to any function entrusted to a municipality is exempt Scope The scope of the exemption is subject to some restrictions which can be easily understood from the following table: Who is eligible What specifically is exempt Limits for Exemption Central Government, State Government, Union Territory, Local Authority and Governmental Authority Functions entrusted to municipality under Article 243W The purpose is to exempt the services provided by Central Government, State Government, Union Territory, Local Authority and Governmental Authority for facilitating the working of municipality. Any services provided other than those specified in Article 243W of the Constitution are not exempted, hence taxable. Example: The State Government has built a burial ground in a village from the funds received by Government from public; such services shall be exempt. Exemption Entry 5 Service by a Central Government, State Government, Union territory, local authority or Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution Scope The scope of the exemption is subject to some restrictions which can be easily understood from the following table: Who is eligible What specifically is exempt Limits for exemption Central Government, State Government, Union territory, local authority or Governmental Authority Any activity in relation to any function entrusted to panchayat under article 243G For fulfilling duties/ responsibilities entrusted upon the panchayat under article 243G of the Constitution. Any services provided other than those specified in Article 243G of the Constitution are not exempted, hence taxable. Exemption Entry 6 Services by the Central Government, State Government, Union territory or local authority to non business entities is exempt, but excluding the following services services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory [ Notification No. 04/2022 -Central Tax (Rate) Dated 13 July 2022 ] and and the Ministry of Railways (Indian Railways) [ inserted by Notification no. 13/2023 w.e.f. 20.10.2023 ] services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; transport of goods or passengers ; or any service , other than services covered under entries (a) to (c) above, provided to business entities. Example: When the Central Government provides Security service to a business entity , such services shall be taxable. When Government charges driving license fees for issuing license to a person , such license fee shall be exempt Important Clarifications Clarifications on above : Circular No . 190/02/2023- GST clarifies that Issues Held that whether GST is payable on accommodation services supplied by Air Force Mess to its personnel. All services supplied by Central Government, State Government, Union Territory or local authority to any person other than business entities are exempt from GST . it is hereby clarified that accommodation services provided by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business entity are covered by Sl. No. 6 of notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 hence exempt.
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