CBIC Clarifications on Applicable GST Rates on Certain Services

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CBIC Clarifications on Applicable GST Rates on  Certain Services 

The CBIC has issued clarifications concerning GST rates of certain services based on recommendations of the GST Council in its 45th meeting held on 17th September 2021. In this regard, Circular No. 164 /20 /2021-GST dated 6th October 2021 has been issued to provide those clarifications. The current article briefs the clarification issued by the CBIC.

Synopsis of CBIC Circular

CBIC has received various representations for seeking clarification in respect of applicable GST rates and Exemptions on the following Certain Services:

  • Services by cloud kitchens/central kitchens
  • Supply of ice cream by ice cream parlors
  • Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of Scholarships for Students with Disabilities
  • Satellite launch services provided by NSIL
  • Overloading charges at the toll plaza
  • Renting of vehicles by State Transport Undertakings and Local Authorities
  • Services by way of grant of mineral exploration and mining rights attracted GST,
  • Admission to amusement parks having rides etc
  • Services supplied by contract manufacture to brand owners or others for the manufacture of alcoholic liquor for human consumption.

The issues have been examined by the 45th GST Council meeting held on 17th September 2021. The issue-wise clarifications are provided in the Circular.

CBIC Clarification on Services by Cloud Kitchens/Central kitchens

CBIC clarified that service provided by way of cooking and supply of food; by cloud kitchens/central kitchens are covered under restaurant service.

As per the Notification No. 11/2017 – CTR, the term restaurant service includes services provided by Restaurants, Cafes, and similar eating facilities including takeaway services, room services, and door delivery of food.

Applicable GST Rate

Services by cloud kitchens/central kitchens are now covered under ‘restaurant service and it will attract  5% GST

GST for Supply of Icecream by Icecream Parlors

As recommended by the 45th GST Council, CBDT now clarified that if ice cream parlors sell already manufactured ice- cream and do not cook ice cream for consumption like a restaurant, it is a supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service.

Accordingly, it is clarified that ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%

GST on Free Coaching Services Provided by Coaching Institutions and NGOs

CBDT clarified that services provided by any institutions/ NGOs under the central scheme of Scholarships for students with Disabilities where total expenditure is borne by the Government is covered under entry 72 of notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and hence free coaching services provided by coaching institutions and NGOs are exempt from GST.

The notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 is reproduced below for reference:

Notification12-CGST

GST on Overloading Charges at Toll Plaza

CBDT has received representations for seeking clarification regarding the applicability of GST on Overloading charges collected at Toll Plazas.

As recommended by the GST Council in its 45th GST council meet, CBDT now clarified that overloading charges at toll plazas would get the same treatment as given to toll charges.

GST for Renting of Vehicles

CBDT is clarified that the expression “giving on hire” includes renting of vehicles. Accordingly, services, where the vehicles are rented or given on hire to State Transport Undertakings or Local Authorities, are eligible for the GST exemption.

This applies to all conditions irrespective of whether such vehicles are run on routes, timings as decided by the State Transport Undertakings or Local Authorities and under the effective control of State Transport Undertakings or Local Authorities which determines the rules of operation or plying of vehicles.

GST for Mineral Exploration and Mining Rights

CBDT now clarified that the services by the way of grant of mineral exploration and mining rights attracted a GST rate of 18% with effect from July 1, 2017

GST for Amusement Parks Rides

CBDT received representations for getting clarification on the applicable rate of GST on services provided by Indoor Amusement Parks/Family Entertainment Centers

  • CBDT now clarified that a 28% rate applies on admission to a place having a casino or race club [even if it provides certain other activities] or admission to a sporting event like IPL.
  • GST rate of 18% will be applied to the following services and it applies to indoor and outdoor services:
    • Admission to amusement parks, or theme park
    • Admission to any place having joy rides, merry-go-rounds, go-carting, etc

Note: This clarification will also apply to Entries 34(iii) and 34(iiia) as they existed before their amendment with effect from 01.10.2021.

GST on Manufacturer of Alcoholic Liquor on Job Work Basis

  • CBDT mentioned that the “food and food products” in the GST rules exclude alcoholic beverages for human consumption. In common parlance also alcoholic liquor is not considered food.
  • Accordingly, services by way of job work about the manufacture of alcoholic liquor for human consumption are not eligible for the GST rate of 5% prescribed
  • GST Council recommended that Services supplied by contract manufacture to brand owners or others for the manufacture of alcoholic liquor for human consumption would attract GST at the rate of 18%

Click here to get  the Official Circular of the Central Board of Indirect Taxes and Customs

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Renu is experience content writer specialised in compliances and company rules.