Removed exemption on supply of pure services and composite supply of goods & services where value of supply of goods is not more than 25% to a Governmental Authority/ Entity

Background:

Earlier, CBIC had issued Notification No.12/2017- Central Tax (Rate), dated June 28, 2017 (“Services Exemption Notification”) w.r.t. the list of exempted supply of services under the Central Goods and Services Act, 2017 (“CGST Act”).

Following Notification has been issued in respect of the same.

Notification:

Now, the CBIC vide Notification No. 16/2021-Central Tax (Rate) dated November 18, 2021, has further amended the Services Exemption Notification w.e.f. January 1, 2022, in a following manner:

• In Serial No. 3 (i.e., pure services) and 3A (i.e., 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), the words “or a Governmental authority or a Government Entity” have been omitted in order to exclude such services supplied to a Governmental Authority or Government Entity. Thus, services mentioned in Serial No. 3 and 3A provided to Governmental authority and Government Entity shall no longer be exempt from January 1, 2022 and shall attract GST as applicable under Services Rate Notification.

Similar notifications have been passed under Integrated Goods and Services Tax Act, 2017 (“IGST Act”) and Union Territory Goods and Services Tax Act, 2017 (“UTGST Act”).

CGST (Rate) Notification: http://www.a2ztaxcorp.com/wp-content/uploads/2021/11/Notification-16-2021-CGST.pdf

IGST (Rate) Notification: http://www.a2ztaxcorp.com/wp-content/uploads/2021/11/Notification-16-2021-IGST.pdf

UTGST (Rate) Notification: http://www.a2ztaxcorp.com/wp-content/uploads/2021/11/Notification-16-2021-UTGST.pdf