· Services by an entity registered under section 12AB of the Income-tax Act, 1961 by way of charitable activities, Entry 12AA is already covered,12 AB is now added.
· Services provided by and to FIFA and its subsidiaries directly or indirectly related to any of the events under FIFA U-17 Women’s World Cup 2020 to be hosted in India or wherever rescheduled.
· Services provided by and to Asian Football Confederation (AFC) and its subsidiaries directly or indirectly related to any of the events under AFC Women’s Asia Cup 2022 to be hosted in India.
· Services by an old age home run by an entity registered under section 12AB of the Income-tax Act, 1961 to its residents (aged 60 years or more) against consideration up to Rs. 25,000/- per month per member.
· Services by way of transportation of goods by an aircraft/vessel from customs station of clearance in India to a place outside India – Exemption extended till 30th Sept 2022
· Services by way of granting National Permit to a goods carriage to operate through-out India / contiguous States.
· Services provided to the CG, SG, UT administration under any training programme for which 75% or more expenditure is borne by the CG, SG, UT administration.
· Services by way of right to admission to the events organised under AFC Women’s Asia Cup 2022
CBIC vide circular no. 02/21/2019-GST dated 28th June, 2019 clarified taxability of penal interest on EMI payments. The circular discuss about two scenarios involving EMI transactions, and the same is reproduced below:
Case — 1:
X sells a mobile phone to Y. The cost of mobile phone is Rs 40,000/-. However, X gives Y an option to pay in installments, Rs 11,000/- every month before 10th day of the following month, over next four months (Rs 11,000/- *4 = Rs. 44,000/-). Further, as per the contract, if there is any delay in payment by Y beyond the scheduled date, Y would be liable to pay additional / penal interest amounting to Rs.500/- per month for the delay. In some instances, X is charging Y Rs. 40,000/- for the mobile and is separately issuing another invoice for providing the services of extending loans to Y, the consideration for which is the interest of 2.5% per month and an additional / penal interest amounting to Rs. 500/- per month for each delay in payment.
Analysis:
As per the provisions of sub-clause (d) of sub-section (2) of section 15 of the CGST Act, the value of supply shall include “interest or late fee or penalty for delayed payment of any consideration for any supply”.
As per the provisions of sub-clause (d) of sub-section (2) of section 15 of the CGST Act, the amount of penal interest is to be included in the value of supply. The transaction between X and Y is for supply of taxable goods i.e. mobile phone. Accordingly, the penal interest would be taxable as it would be included in the value of the mobile, irrespective of the manner of invoicing.
Case — 2:
X sells a mobile phone to Y. The cost of mobile phone is Rs 40,000/-. Y has the option to avail a loan at interest of 2.5% per month for purchasing the mobile from M/s ABC Ltd. The terms of the loan from M/s ABC Ltd. allows Y a period of four months to repay the loan and an additional / penal interest @ 1.25% per month for any delay in payment.
Analysis
In terms of Sl. №27 of notification №12/2017- Central Tax (Rate) dated the 28.06.2017 “services by way of (a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services)”is exempted. Further, as per clause 2 (zk) of the notification №12/2017-Central Tax (Rate) dated the 28th June, 2017, “‘interest’ means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) but does not include any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;”.
The additional / penal interest is charged for a transaction between Y and M/s ABC Ltd., and the same is getting covered under Sl. №27 of notification №12/2017- Central Tax (Rate) dated 28.06.2017. Accordingly, in this case the ‘penal interest’ charged thereon on a transaction between Y and M/s ABC Ltd. would not be subject to GST, as the same would not be covered under notification №12/2017-Central Tax (Rate) dated 28.06.2017. The value of supply of mobile by X to Y would be Rs. 40,000/- for the purpose of levy of GST.
It is further clarified that the transaction of levy of additional / penal interest does not fall within the ambit of entry 5(e) of Schedule II of the CGST Act i.e. “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act”, as this levy of additional / penal interest satisfies the definition of “interest” as contained in notification №12/2017- Central Tax (Rate) dated 28.06.2017.
It is further clarified that any service fee/charge or any other charges that are levied by M/s ABC Ltd. in respect of the transaction related to extending deposits, loans or advances does not qualify to be interest as defined in notification №12/2017- Central Tax (Rate) dated 28.06.2017, and accordingly will not be exempt.
The major decisions by GST Council in it’s 32nd meeting are as follows:
GST Exemption limit increased to Rs.40 Lakhs from existing Rs.20 Lakhs for supplier of goods. The exemption limit of small states also increased to Rs.20 lakhs from existing Rs.10 lakhs. The Threshold for Registration for Service Providers would continue to be Rs 20 lakhs and in case of Special Category States at Rs 10 lakhs.The exemption limit is the threshold of annual turnover above which companies have to mandatorily register under the GST regime.
Extended the composition scheme to traders from informal sector rendering services or mixed supplies with a turnover up to Rs 50 lakh. The composition rate for service providers in the informal sector has been pegged at 6 per cent.
In the meeting today, the GST Council also decided to allow Kerala to levy a cess to cope up with the natural calamities it faced last year. The cess is applicable only on intrastate transactions.
Two ministerial panels have been formed to take a closer look at real estate and uniformity of taxation on lottery or other issues arising out of lottery
To ease compliance burden, a single annual return with quarterly tax payments has been introduced for the composition schemes.
Free accounting and billing software will be made available to small assessees upto Rs.1.5 crore turnover.
The limit of Annual Turnover in the preceding Financial Year for availing Composition Scheme for Goods shall be increased to Rs 1.5 crore. Special Category States would decide, within one week, about the Composition Limit in their respective States.
The limit of composition schemes for goods has been raised to Rs.1.5 crore at 1% GST rate.
Karthik & Sunil 